Vineyard & Winery Management Magazine

Web Site Exclusives
(scroll down for more)

Franzia’s Unified Keynote Speaks to Past, Present and Future

By Deborah Parker Wong

In a rare and much anticipated public address, Bronco CEO Fred Franzia delivered the January 26 keynote speech and, with it, set the stage for the 2016 Unified Wine & Grape Symposium in Sacramento. Franzia paid homage to the founding figures of the California wine industry, including his uncle Ernest Gallo, with a look back at their history and, with his characteristic candor, tackled some of the trade’s most relevant topics.

As the nation’s largest vineyard owner — Bronco Wine owns in excess of 40,000 acres — he was quick to count grape growers among the most interesting and opinionated people he deals with in the industry. He credited Central Valley growers with teaching him much through the many hours he’s spent in their company over the last 50 years. Expressing regard for his peers and fellow industry icons Robert Mondavi and Jess Jackson, Franzia pointed to their similar practice of always tasting blind and their keen ability to critique what they tasted.

On the subject of industry growth, Franzia was at once optimistic and pragmatic. His conviction that each grower needs to plant the right variety and farm efficiently was a recurring theme throughout his address. In tackling the “perceived” problem of over supply, he said, “Forty percent of the wine market isn’t being supplied by California. Growers need to increase grape supply from their own vineyards.”

Given the challenges Napa and Sonoma counties face with vineyard expansion, he cited San Joaquin Valley as the most productive region and the next source for high-quality wine. “San Joaquin has the infrastructure necessary to process the wines and meet the demand side,” he said. “The future will be bright and Lodi growers are in there whether they like it or not.”

Quoting industry source Mel Dick, he noted that U.S. consumption now stands at 327 million cases annually: “If we drank as much as the United Kingdom, that number would double, but we’d need to drink 1.6 billion cases to match the French,” he said. Bronco’s 20 million annual case volume contributes significantly to the bottom line, and Franzia believes U.S. consumers can achieve that ambitious goal by 2040.

With the Wine Group, Constellation and larger wholesalers on an acquisition binge, Franzia advises keeping a close eye on the growing power of the unions. “2015 was a banner year for consolidation,” he said. “Eventually, we’re going to have three elephants in the room, and the circus will be overrun by the mice. Someone will start a non-union shop and get the business.”

Speaking to Treasury Wine Estates’ recent purchase of Diageo’s wine portfolio, Franzia is optimistic about the company. “Despite all of the transitions that it’s gone through, from what I’ve seen in the last two years, they’re back and going to get stronger. Buying Diageo was a good move,” he said.

“Get smart” was his political call to action regarding subsidized labor costs, the politics that accompany it and the inheritance tax that works against family succession. “We don’t take politics seriously enough to get what we want. [Politicians] focus on the small stuff at the expense of the big stuff,” he said.

In a touching tribute to the late vintner Louie Petri, Franzia thanked the Wine Group for letting Bronco acquire the Petri name and announced the company’s intention to reinstate it in use at the winery in honor of his legacy. Petri was instrumental in founding the Allied Grape Growers and, in 1953, his Escalon winery was the largest domestic producer of wine.

Fetzer Vineyards Presents at COP21 2015

By M.V. Wood

A few decades ago, in a whole different world, many people regarded the folks at Fetzer Vineyards as a group of way-out hippies, extolling far-fetched ideas like “sustainability” and “environmental responsibility.” But things change. The world changes.

These days, Fetzer is a respected industry leader and a superstar in the realm of conscious business. It was one of only five wine companies in the world — and the only one in the United States — to be invited by the United Nations to present at COP21, the Sustainable Innovation Forum on climate change in Paris, at the end of last year.

When founder Barney Fetzer started making wine in 1968, he already had an earth-friendly philosophy and many of his practices didn’t align with “business as usual,” says Josh Prigge, director of regenerative development at Fetzer. “I’m sure some people thought they were a bunch of crazy hippies,” he says, but adds they took pride in their reputation as rebels and just kept doing what they were doing. “Things worked out well. Sustainability is in our DNA,” he says.

Prigge spoke at the business forum of the COP21 conference and shared some techniques and ideas behind Fetzer’s many environmental successes, addressing topics including zero-waste business practices, reducing greenhouse gas emissions and the winery’s efforts toward net-positive operations. The panel also included Valentina Lira from Concha y Toro, Jean-Guillaume Prats of Moët Chandon Estates & Wines, Alice Tourbier of Château Smith Haut Lafitte and Robert Eden of Chateau Maris.

According to Prigge, the first step a business needs to take to become more environmentally and socially responsible is to measure everything and get a baseline of what’s going on in the company. “You pay attention to what gets measured, so begin by measuring everything you want to pay attention to,” he says.

Fetzer has been measuring its carbon footprint for years and was the first wine company to publicly report greenhouse gas emissions with the Climate Registry in 2005. Since that time, the company has reduced emissions by 50%, with a goal of becoming carbon neutral in 2016 and net positive by 2030. One of the things that help keep its carbon footprint to a minimum, Prigge says, is that its sustainable farming methods eliminate the need for fossil-fuel-based synthetic chemicals. For example, grazing sheep help with weed control and soil fertilization. And a compost added to the soil is made from the leftover grape skins, stems and seeds from the winery; a practice that also reduces waste. Through a variety of composting and recycling efforts, Fetzer has been able to divert 98.5% of all waste from landfill, another of its key environmental successes.

The company has also shifted to 100 percent clean energy, the first winery in California to do so back in 1999. About one-fifth of its energy is produced by the solar panels that cover 75,000 square feet of rooftop space. The rest is purchased through an energy provider that uses wind turbines exclusively.

Prigge says that, in addition to sharing information and learning from each other at COP21, the highlight was “seeing how many young, enthusiastic people were there — and how much they cared. The younger generation realizes this is the world it’s inheriting and is very proactive when it comes to sustainability.”

One of the upshots of being a conscious business, he adds, is that “you have very loyal consumers. Not only do our consumers want a great-tasting wine, but they also care about our business practices. They will go out of their way to find and buy products that match their values.”

As well as growing a loyal customer base, conscious business practices also help companies attract and keep employees, he adds. “People want to work somewhere where they’re doing good in the world, where they’re making a difference,” he says. When a company is truly committed to creating a better world, employees will stick with it through the long haul.

Some of the best innovations at Fetzer, Prigge continues, came from employees. For example, the director of production took it upon himself to reduce waste in his department and keep it out of landfills. He contacted his vendors and figured out ways to return all the boxes and palettes from deliveries so they could be reused. They also figured out which packaging materials could simply be done away with. Another employee did some research and found a cleaning product for the wine tanks, peracetic acid, which requires less rinsing and saves more than 200,000 gallons of water each year. That, in turn, reduces the amount of energy needed to pump water.

“Everyone is involved, everyone is looking for ways to make things better,” Prigge says. “That’s a part of the culture here.” Judging from the enthusiasm around COP21, it’s perhaps becoming, more and more, part of the business culture everywhere. Someday, this may become “business as usual.”

Study Reveals Growth in American Fortified Wine Producers

By Kenneth Young

Between 1951 and 1975, sweet, mostly fortified wine accounted for about 70% of all American wines produced. The last year fortified wine sales exceeded table wine was 1966 and, a decade later, only 4% of all American wines were fortified.

According to a recent study by the Sweet and Fortified Wine Association (SFWA), 1,004 American vintners make approximately 11 million gallons of fortified “dessert” wine, or 2.5% of all American wine production. The study also found that, according to the Wine Institute and U.S. Department of Commerce figures, dessert wine sales (including “foreign wines entering U.S. distribution”) amounted to 8.6% of total U.S. wine sales in 2014. This number appears fairly constant over the past decade.

SFWA research found the vast majority (84%) of American fortified wine is red, port-style. White, port-style wines account for 9% of production. Sherry-style wines account for 5% of American’s fortified wine while Angelica, Madeira, Marsala and Vermouth make up a meager 2% of total production.

American vintners use more than 50 varieties of classic/noble, native and hybrid grapes in fortified wine production. Leading red, port-style wines are blends of classic vinifera grapes (19%), while Zinfandel is the most popular single-grape variety (16%). Some 15% of American red, port-style wines are made from blends of domestically grown, classic Portuguese varieties. Muscat varieties are favored by white, port-style producers (22%), while 18% of vintners used Chardonnay for “white ports.”

According to study data, the average retail price of American red, port-style wine at the winery/tasting room is $.051/mL, or $38.25 for a 750 mL bottle. The average retail price for white, port-style wine is $.053/mL, or $39.75 per 750 mL bottle. The average retail price for American Sherry-style wine is $.040/mL, or $30 per bottle. The data also indicates that 67% of American fortified wines retail at between $30 and $60 per 750 mL bottle at the winery, while only 17% of all fortified wines exceed $60 per bottle.

As a result of the 2006 trade agreement with the European Union, American fortified wine producers are prohibited from using the term “port” or any terms containing “port” on labels submitted for TTB approval after March 2007 under regulations adopted to implement the use of so called “semi-generic designations of geographic significance.” The recent SFWA study indicates that approximately 45% of American port and sherry-style wine producers continue to use the term “port” and “sherry” on labels under provisions of the 2007 regulatory “grandfather clause.”

The SFWA 2015 study of American fortified wine production indicates that, while fortified wines are a relatively small segment of the domestic wine industry, one in eight American vintners include fortified wines in their wine production portfolio.

USDA Grant Goes to Precision Ag Research

$6.2 million invested in developing new vineyard management tool

By Linda Dailey Paulson

A four-year, $6.2 million grant from the USDA National Institute of Food and Agriculture Specialty Crop Research Initiative (SCRI) will fund research and development of technologies designed to help grapegrowers achieve greater productivity through precision agriculture.

The research, which has been actively supported by The National Grape and Wine Initiative (NGWI), is focused on developing digital mapping tools growers can use to make informed crop management and harvesting decisions.

Raw spatial data gathered via sensors, soil probes and custom-developed instrumentation – gathering metrics such as canopy condition, berry size and color, and soil characteristics – will flow into maps growers can use and annotate to achieve the ideal crop balance and eliminate variability. Terry Bates of Cornell University and Stephen Nuske of Carnegie Mellon University are leading the research.

“I think 2015 (in California) is a good example of the challenges that growers have with accurate crop estimation,” said John Aguirre, president of the California Association of Winegrape Growers. “Many growers saw cluster counts that seemed to be in line with average yields, either the same or comparable. But ultimately, reports came in that yields were far lower than expected.”

Although this grant may be new, the research is not.

The work extends research on which Bates and Nuske have been working for the past five years, with the support of vineyard operations across the country. “The main goal we’ve been working toward is being able to measure the production characteristics of vines and vineyards,” Nuske said. There is now little information about how vines and vineyards perform in the growing season, which can ultimately lead to production losses if specific issues are not addressed as plants are growing.

The goal is providing growers with a cost effective vineyard management tool based on spatial measurements, said Bates, senior research associate and director of the Cornell Lake Erie Research and Extension Laboratory. The tool should inform management decisions that will enable maximum profitability of the vines.

Different technology-based productivity measurements, such as the amount of crop, the size and vigor of the plant as measured via canopy, and soil characteristics, have been developed. “The funding by the USDA and NWGI enables us to take this research to the next step,” Nuske said.

That next step is taking those precision measurements and developing a suite of tools designed to help growers become more efficient and productive.

In addition to developing a “dashboard” or means for growers to work with the existing spatial data from a single computer interface, the researchers are also investigating the applicability of other measurement methods and techniques, such as nondestructive vine estimation and berry count, said Jean-Mari Peltier, NGWI president.

This information – vine health, canopy size, and crop size – can be used to determine the crop load measurement. Crop load is a different metric from crop size or yield. Different management techniques can be applied to ensure uniformity in fruit maturation, for example, which can help ensure better wine quality, Bates said.

The technology addresses an important question for growers: yield estimation. Bates said this information can help operations better plan and manage assets such as forklifts, tanks and labor.

The tool itself will, Peltier said, take all the raw spatial data and flow that into a knowledge system for growers. It will be designed to provide vineyard management decision support. Although much of the focus surrounding the research grant has been on crop estimation, this will be a sophisticated, data-rich management tool. Researchers will also develop a GPS system growers can use to make informed decisions on issues such as inputs, thinning, pruning, or even harvesting.

“We don’t spell it out, but there’s the opportunity to do other things with the technology beyond crop yields,” Bates said. Because a grower could use and overlay any GPS data – pest observations, for example, or where and when wind machines were used in a block – she could notice other trends. A canopy in declining health, for example, could be indicated by NDVI (normalized difference vegetation index) data. This could indicate the presence of Eutypa, Pierce’s disease, crown gall, or one of any other diseases that affects canopy health.

The technology could better enable growers to practice variable crop management on a larger scale. Sensors on equipment such as shoot and fruit thinners or tractors could enable growers to use technology to manipulate individual vines appropriately to achieve balance, as opposed to treating a field uniformly. Controlling balance allows growers to optimize for yield and quality while also reducing the variability, Nuske said.

One of the research questions will address the relative value of variable crop management versus uniform crop management.

“One of the things we’re going to learn is how this impacts grape sectors differently,” Peltier said. “The differences between high-end, premium grapes and grapes managed for tonnage are going to be important.

“I do think this research has the potential to radically change how we farm grapes.”

California Governor Amends Social Media Bill

AB-780 seen as a step in the right direction

By Shana Bull

On Oct. 1, California Governor Jerry Brown signed Assembly Bill 780, authored by Das Williams (D-Santa Barbara), which eases tied-house restrictions on social media use by wineries, breweries and distillers. As of Jan. 1, 2016, alcoholic beverage producers will be allowed to identify retailers that carry their products, via “electronic media.”

According to John Carr, information officer at the California Department of Alcoholic Beverage Control (ABC), “Electronic media is a term that includes all forms of electronic media, requiring the release of information in a direct communication to a consumer, including the manufacturer’s website, Twitter handle, Facebook page, Linkedin page, etc.”

In simple terms, alcohol brands and employees that use social networks as brand ambassadors will be able to share content regarding where to purchase their beverages via social media, as long as the post meets the following conditions:

(1) The listing does not also contain the retail price of the product.

(2) The listing is the only reference to the on-sale or off-sale retailers in the direct communication.

(3) The listing does not refer only to one retailer or only to on-sale or off-sale retail establishments controlled directly or indirectly by the same retailer.

(4) The listing is made, produced or paid for exclusively by the non-retail industry member.

Brands must mention two or more retailers (unaffiliated on-sale or off-sale retailers) in a social media post, so as not to play favorites and provide a “thing of value” to a single retailer.

While the bill removes the requirement that the information be provided only in response to a direct inquiry, some producers say there are still a few missing pieces. For example, alcoholic beverage producers are not allowed to share retailer photos or retweet retailer posts, unless multiple retailers are included.

Alison Crowe, a Napa-based consulting winemaker for several wineries including Garnet Vineyards, Picket Fence, Buccaneer, and Major League Baseball Wines, pointed out that social media is how many small brands engage with their communities. “This is simply communication and reflects the new world we live in,” she said. “Laws regarding communication methods and cultural norms from almost 100 years ago need to be re-thought.”

Jeff Stai, owner of Twisted Oak Winery in Calaveras County, focuses 90% of his marketing efforts on Direct to Consumer (DTC) sales. While the amended law isn’t perfect, he said, it’s a step in the right direction. “You will be able to mention more than just the name and phone number of a retailer, wineries can link to their websites or tag (retailers) on social media. It is a bit more modern,” he said.

It even offers opportunities for self-amusement. “What I love most is that you just have to mention a second retailer in the tweet,” Stai said. “The retailer doesn’t even have to carry our wine, just as long as I mention two retailers. You can have more fun with tweets, and I probably will.”

What this ultimately means for California wineries, is that the government is moving toward amending some of the state’s Prohibition-era laws to make sense in today’s digital world.

Fires Damage West Coast Winery Operations

From British Columbia to California, Wary Industry Watching Flames

By Linda Dailey Paulson

West Coast wildfires burned across seven states and British Columbia this summer, destroying and threatening vineyards and wineries, and disrupting winery operations.

As of Sept. 13, according to National Interagency Fire Center data, 34 active and uncontained wildfires burned on roughly 1.6 million acres in Oregon, Washington, Idaho, California, Texas, Utah and Wyoming. Currently, Washington state is reporting the most fires – 13 – and none of them fully contained. California reports eight fires. Eleven fires are active in the Kamloops Fire Centre region, according to the British Columbia Wildfire Service.

At least two wineries have been destroyed to date. On Sept. 13, Shed Horn Cellars, in California’s Lake County, fell victim to the Valley Fire – which spread across Lake, Napa, and Sonoma counties to consume 70,000 acres. (The fire was 30% contained at press time). Ventimiglia Cellars, a boutique winery in Chelan, Wash., was reduced to ash on Aug. 14 from the fast-moving Chelan Complex fire.

Shed Horn Cellars’ owners lost the winery as well as their home, but the tasting room in Middletown remains unaffected and they have sufficient inventory to both fill orders and stock their tasting room, according to Terry Dereniuk, executive director of the Lake County Winery Association.

The Valley Fire also damaged Langtry Estate & Vineyard and caused some Lake County growers to suspend harvest operations. Damage at Langtry, which included a home on the property and a portion of its vineyard, was “not as bad as they had thought” and is “back up and running” Dereniuk said. The historic Lillie Langtry house and all the winery employees are safe, she said.

Vineyards in evacuation areas have had to stop harvest operations. However, the Lake County Winegrape Commission is working with local officials to try to get small crews into areas under evacuation that are not directly involved in the fire.

Fire losses are not deterring Ventimiglia Cellars from continuing operations, according to Susan Trimpe, director of Cascade Valley Wine Country in Washington. “Word on the street is that they are still picking and crushing.” Ventimiglia said he will rebuild with the help of neighboring facilities, which have donated extra barrels and equipment.

So far, the fire has steered clear of Napa Valley wineries and vineyards. “It’s a terrible tragedy that’s occurred in Lake County. Our hearts go out to them,” said Patsy McGaughy, communications director for the Napa Valley Vintners. The association has not received any reports of properties threatened or damaged by fire.

Even so, McGaughy said, the Napa wine community is gearing up to help its employees, many of whom live in Lake County.

Fires elsewhere have also threatened winery operations. August wildfires in British Columbia’s Okanagan area – notably the Testalinden fire – threatened the Rustico Farm and Cellars and Church & State wineries near the city of Oliver. Bruce Fuller of Rustico Winery posted a message on social media. “Close call at Rustico. Fire took out our mountainside right to vineyard. So far our log home and winery spared.” Flames came to within 50 feet of Church & State’s production facilities. Tinhorn Winery had to contend with the Testalinden fire as well as ongoing controlled burns nearby.

Meanwhile, in the Columbia River Gorge, winds were fanning flames toward the Maryhill Winery in Goldendale, Wash.

Open for Business

While life and limb are most important in these situations, the potential economic damage already occurring from diminished tourism related to the fires is a concern. The public appears to be staying away from areas near, but unaffected by fires, including the Napa Valley and Washington’s Cascade Valley.

“We need people to come visit. We can’t be hurt any more,” Trimpe said. “The fire is 15 to 20 miles up the lake, but it’s like a ghost town. We’ve had some incredibly gorgeous days during the fire season.” The region has a two-weekend long crush celebration planned the first weeks in October. “We’re waiting for the people to show up and have fun.”

Evacuation orders and road closures are worrying potential Napa Valley visitors, McGaughy said. “It’s time to remind folks that Napa Valley wineries are open for business. We don’t want this to deter people from coming up here.”

Social media enabled visitors’ bureaus and wineries to broadcast and redistribute news of those tasting rooms and wineries still open for business. Photo and video posts showed emergency personnel taking a break outside an open tasting room and winemaking activity at Val du Vino winery in Murphys. Lake County-based Six Sigma Ranch kept the public aware of its operations during the Valley Fire after being previously threatened by both the Rocky and Jerusalem fires in July and August.

California, Washington, and British Columbia winemakers will face a new concern once the fires are out: public perception of whether wines from the 2015 vintage in affected areas have suffered damage from smoke taint.

Increased Internet and Social Media Use Fail to Translate into Wine Sales

U.S. buyers like online wine discounts, but not shipping costs

By Linda Dailey Paulson

U.S. consumers are increasingly using the Internet to obtain information about wine, but according to a recent survey, this is not yet translating into sales.

There has been a steady rise in the Internet’s influence on the U.S. wine market since 2011, according UK-based Wine Intelligence, which conducted an online survey of 2,227 wine consumers in the United States. Forty-one percent of those surveyed stated that they use wine merchants’ websites, and an additional 37% said they utilize newspaper or magazine websites for wine information. Thirty eight percent said they use social media to get updates about wine discounts and promotions.

Roughly 11% of survey respondents said they shop for wine online, citing the relative ease of buying online and the variety of discounts and promotions in comparison to brick-and-mortar retailers. Although low, this figure has more than doubled since 2011.

Internet searches for wine information do not translate into sales, according to Wine Intelligence analysts, because of the “convoluted and restrictive legislation surrounding liquor sales at the state level.” The report also finds, “America’s bricks-and-mortar retailers remain quite effective at fostering and maintaining strong personal relationships with their customers.”

This can be a mixed blessing. Molly Rubinstein, sommelier at San Francisco’s Petit Crenn, and distributor for Northwest Wines, said that although consumers “still put a lot of stock in having the sommeliers or wine merchants giving them recommendations,” they will use search tools to find better prices on the Internet. “They will thank the somm for their recommendations,” she said, “but will then leave and purchase their wines online.”

While Internet sales account for only about 3%-4% of total wine sales by volume in the U.S., “It is a very fast-growing segment of the retail market,” said Marc R. Kauffman, consulting sommelier and wine advisor for the winemaking reality TV show and e-commerce site “Best Bottle.”

“The wine business is very traditional,” he added. “Many wineries still do not have effective Internet websites or winery sales platforms.”

Breaking Down Barriers

For Internet-based sales to grow, said Wine Intelligence research director Juan Park, it would require legislation to make online purchases simpler and straightforward, as well as reduced delivery and transportation costs. “Consumers are hardly going to spend extra money on a regular wine they can find in a shop when there is an extra delivery cost and an extra delay as to when they can access the wine,” he said.

“A mixed model such as ‘click and collect’ could be the best of both worlds – online efficiency and access to information, but with speedy access to the goods purchased and no extra delivery cost.”

The click-and-collect e-commerce model originated in the UK, and U.S.-based businesses are now experimenting with the concept. Consumers purchase retail goods online for pickup at a specific outlet. This could be a store, but also a warehouse or so-called “dark store” – a location designated for customer pick-up only.

In late August, Amazon announced that it is testing a new “Prime Now” service that will deliver wine to Seattle buyers within hours of purchase. One-hour deliveries are priced at $7.99, but two-hour deliveries are free.

Getting More Buzz

Direct-to-consumer sales remain the bread-and-butter for U.S. wineries. “If there is such a thing as a ‘typical winery,’ the majority of a winery’s DTC (direct-to-consumer) sales are done in the tasting room and through wine club shipments, and 80% or more of wine club sign-ups occur in the tasting room,” said Jeremy Benson, executive director of Free the Grapes! “Therefore, the majority of winery DTC sales are driven by tourism, not the appearance of the Internet as a new sales channel.”

Most wine professionals say the Internet is nominally effective at helping wineries get product buzz. It works best for promoting limited-release wines and those not available through retail channels. Rubenstein said wineries promoting seasonal wines, such as rosés during the summer and spring, find it “gets the consumer in the right spirit and open for sales.”

The Internet and social media are benefitting wineries in building brand loyalty and credibility, and in providing great customer service, Benson said. In addition to tourism trumping technology, most wineries produce less than 10,000 cases, which means they “need to pick and choose the states that make sense for their marketing and sales plans, just like they do with 3-tier sales.”

Internet sales will continue growing, Kauffman predicts. Wine consumers reaching legal drinking age, who grew up with the Internet, will become online wine buyers. “Eventually,” he said, “the Internet will be a primary source for winery information and sales.”

Pennsylvania Privatization Vetoed

Bill killed at Governor’s desk, yet advocates hopeful of change

By David Falchek

On July 6, Pennsylvania came as close as it ever has to privatizing the state’s wine and spirits retail and wholesale monopoly when both houses of the legislature sent a privatization plan to the governor’s desk.

Democratic Governor Tom Wolf vetoed the bill, but coyly left the door open to changes in the current system and continued negotiations as the state faces a budget feud. The move pushed privatization near the forefront, giving advocates a boost and creating a new sense of inevitability.

The bill would have created a three-tier system, selling retail and wholesale licenses, in a complete and total privatization. It would have given privately owned beer retailers (called “distributors” in Pennsylvania) and other licensees, such as restaurants and hotels, the first crack at 1,200 licenses that would allow them to sell wine and spirits.

With that plan nixed, Wolf and supporters of the current system call for “modernization” of the state system of 600-plus Wine & Spirit Shoppes operated by the Pennsylvania Liquor Control Board, PLCB.

Wineries looking for a key to the Keystone State should not be too encouraged – yet.

“This means the status quo continues,” said Michael Kaiser of WineAmerica, a lobbying and trade group based in Washington, D.C., who also serves on the board of Free the Grapes. Neither group has taken an official position on Pennsylvania’s privatization, but they monitor changes closely with an eye toward expanding direct-to-consumer shipping.

“I can't see any kind of shipping bill getting through without privatization. They will forever be linked,” Kaiser said. “So any winery looking to break into Pennsylvania as a new market will still have to try to work with the PLCB.”

For at least twenty years, polls have shown a majority of Pennsylvania citizens want the state government out of the wine and spirits business. Governors on both sides have championed privatization: Democrat Milton Shapp in the 1970s, Republicans Dick Thornburgh in the `80s and Tom Ridge in the `90s. Each came up against the political marriage of social conservatives and pro-union liberals.

Political tendencies have changed. Today's elected Republican is more likely to be a limited-government fiscal conservative, embodied by privatization champion and Speaker of the House Mike Turzai. While union enrollment has waned, its influence has not. Existing trade and government unions have viewed the state store jobs, about 3,500 of them represented by the United Food & Commercial Workers Union Local 1776, as a line in the sand.

“The old paradigm of social conservative and union liberal has dissipated,” said Matt Brouillette, president and CEO of conservative think tank The Commonwealth Foundation, based in Harrisburg, Pa. “But all unions – government and non-government – are circling the wagons, and as a collective force remain powerful and supportive of the state monopoly.”

Support for Privatization

Yet, popular support for privatization has grown as more Pennsylvanians experience how alcohol is sold in other states, and desire grows for buying wine online or directly from producers. People have bristled at controversial news about the PLCB, as nearly all local news organizations advocate for privatization in editorials.

“There’s a difference between want and priority,” said Albert Brooks, who blogs regularly about the state privatization battle on www.noplcb.blogspot.com. “For as long as we’ve had scientific polling, the majority of citizens has wanted privatization, but it doesn’t rise to level of issues like education, clean water and property tax reform.”

Privatization remains a bargaining chip in the state’s budget battle, offering some hope for a grand deal. But privatization advocates are accustomed to a long time horizon.

Brooks senses a deepening frustration among conservatives and believes the next election cycle could bring a larger GOP majority to Pennsylvania’s legislature that could punch privatization through or override a veto.

People like Brooks have been able to influence the conversation, using data to combat the now-seldom-invoked claim that government monopoly protects the state from alcohol’s damaging societal effects. “In any measure of alcohol ills Pennsylvania is never great, and anywhere from average to bad,” he said.

Border Bleed

Claims that the state monopoly is a cash cow are more difficult to debunk. The monopoly annually kicks in between $80 to $105 million to state coffers, though system supporters prefer to cite the $500 million, which includes sales tax, which would be paid by privately operated stores. But as an arm of the state, the stores don’t pay private sector business taxes. The long-term liabilities of guaranteed pension and retiree health care for store workers are carried by the state, i.e. taxpayers.

Then there is border bleed – alcohol purchases made out-of-state.

The PLCB’s own 5-year-old study suggests that border bleed accounts for $220 million in sales. But Brooks and others think that number is closer to $300 million. A look at PLCB sales figures showed greater sales in Pittsburgh than Philadelphia, which has more than four times the population. Unlike Pittsburgh, Philadelphia is right on the border of New Jersey, Delaware and Maryland, suggesting that the state system drives sales and economic activity out of the state.

But no one knows for sure how privatization would impact state revenue or how much border bleed would come back.

“The legislature has viewed the state stores system as a bird in hand,” said Brouillette of The Commonwealth Foundation. “They are afraid of the change and can’t see what that change would look like.”

National alcohol trade organizations have remained silent, choosing to not the bite the hand that regulates. The American Wine Society, a consumer group, officially endorsed the state’s privatization, arguing it would expand consumer access and choice.

“Everything points in the direction of us joining the 48 others states,” Brouillette said. “Common sense is winning over this vestige of Prohibition.”

ASEV National Meeting Tackles Rootstocks, Pests and Diseases

International crowd gathers at annual conference in Portland, Ore.

By Linda Dailey Paulson

The wine industry assembled in Portland for the 66th American Society for Enology and Viticulture (ASEV) National Conference, held June 15-18.

Despite the word “American” in the organization’s name, attendees and speakers from Canada, South Africa and other nations participated, sharing information alongside United States-based researchers and industry professionals.

Research presentations addressed a wide range of enology and viticulture topics affecting the industry, many of which were included in the general viticulture session.

GRN Rootstocks

Of particular interest was an evaluation of GRN rootstocks conducted by Dr. Andy Walker, Louis P. Martini Endowed Chair in Viticulture at UC Davis. The lab continues actively evaluating new plant material for field trials based on broad resistances – including salt, nematodes and drought. GRN-1 was the most resistant, Walker reported. One of its characteristics is vigorous growth with deep roots, which Walker noted is “not for everyone, but (the rootstock) should be available.”

Results of comparing conventional rootstock with so-called “ubervines” – rootstock with a 90 cm cane – were presented by Larry Bettiga, viticulture farm advisor for the University of California Cooperative Extension, in Monterey County. At $5.50 per vine, it was important to determine its benefits compared to purchasing conventional rootstock at $3 per vine. Although labor was not factored into the assessment, he found the additional cost may be justified given the potential for earlier production with the ubervine.

Leaf-Removal Practices

A pair of researchers looked at leaf removal practices in different climates. Kaan Kurtural, associate professor at California State University, Fresno, evaluated strategies specific to Merlot grapes grown in the Central Valley heat in tandem with the fruit’s anthocyanin levels, since fruit with lower levels command a lower price. Based on his findings, a pre-bloom leaf removal is ideal and had no loss of yield.

In addition to sessions on general enology topics, several specialty topic presentation sessions were held, including one on pests and diseases, which began with a survey of grapevine viruses in British Columbia by Sudarsana Poojari, a researcher with Agriculture and Agri-Food Canada Pacific. The most prevalent was the grapevine fleck virus, “which was surprising to us,” said Poojari. Other surprises included finding grapevine red blotch virus in only two of 812 samples, and no positives of Arabic mosaic virus.

Kari Arnold, a UC Davis doctoral student, sought to determine whether plant material age – based on planting booms – was a factor in diseases such as neopviruses and leafroll. Newer blocks were less virus-infected than the older ones, they determined, and infection is more likely from a neighboring vine. They are now updating screening protocols as well as developing an online assessment tool for growers.

Not yet interested in sour rot? Those who attended Cornell University doctoral student Megan Hall’s enthusiastic presentation of her research into understanding sour rot and how to manage it surely came away with a new appreciation for the rarely investigated topic. Sour rot has been seen worldwide, she said, but not fully characterized despite the fruit damage it causes. Using antimicrobial and insecticide treatments in combination are effective controls, while training vines on a top wire system also reduces sour rot, Hall reported. Research on the topic is continuing to solidify her findings.

Bhanu Donda from Washington State University sought to determine how grapevine leafroll disease spreads in newly planted vineyards surrounded by older, infected blocks. Preliminary results have found that the optimal distance for planting new vines from older ones is about 30 meters, but further study is needed. Additional related questions were raised as a result of the work, Donda said.

Progress in using entomopathogenic nematodes (EPNs) to control mealybug populations, which plague both wine and table grapes in South Africa, was explained by Patrique Le Vieux of the University of Stellenbosch in South Africa. Researchers looked at two different nematodes, but found S. yirgalemense was 90% persistent in the field. In the 12 week study, they found those areas with the highest nematode concentrations had the highest mealybug mortality rates.

Jensena Newhouse from Washington State University evaluated different spraying programs to combat powdery mildew. Of nine different programs, including a control program with no spraying, the best result was achieved from using an effective combination of synthetic fungicide and biological controls in rotation.

Tours of Columbia Gorge vineyards and wineries as well as the second Symposium of Nitrogen in Grapes and Wine were also among the conference events.

The next ASEV National Conference will convene in Monterey, Calif., June 27-July 1, 2016.

FAA Approves Yamaha Drone for Agricultural Use

Exemption gives farmers reason for optimism

By Jennifer Strailey

As drones increasingly become a part of daily life, is the approval of Unmanned Aircraft Systems (UAS) for widespread commercial use on the horizon?

On May 1, agriculture took a step in this direction, when the Federal Aviation Administration (FAA) – under Section 333 of the FAA Modernization and Reform Act of 2012 – granted the Yamaha Motor Corporation of Cypress, Calif., an exemption to conduct agricultural operations in the United States using its remotely piloted RMAX helicopter.

“The RMAX is capable of providing a wide array of essential agricultural spraying services, including watering, fertilizers, pesticides and herbicides,” noted the FAA in Exemption 11448. “The RMAX can also be equipped with sensors and equipment to detect and monitor agricultural areas that require irrigation, fertilization or other treatments.”

In Japan, the RMAX has a 20-year history of safely performing agricultural operations. According to Yamaha, the RMAX has logged over 2 million flight hours in Japan alone.

The FAA indicated that this “well-established performance and safety record,” along with the RMAX’s recent approved use in Australia and South Korea, influenced its decision to grant the exemption.

Yamaha’s RMAX also has a history of use in the U.S., albeit a briefer one. The remotely controlled helicopter has been used to spray vineyards in California through a research partnership with the UC Davis since 2012.

Ken Giles, a UC Davis agricultural engineering professor and lead researcher on the University’s remote-controlled aircraft project, told V&WM: “The FAA approval is certainly cause for optimism, if not celebration, in that it affirms that integration of a larger, payload-delivering UAS into the airspace system is a reality and that responsible, safe and regulated use of the technology is now possible.”

Specs and Uses

The Yamaha RMAX rotorcraft is 9 feet long and 3 feet 6 inches tall, has an empty weight of 141 pounds and a load capacity of about 61 pounds for both liquid and granular applications. The unmanned aircraft has a maximum speed of 45 mph.

“Certainly, FAA approval is a positive development,” said John Aguirre, president of the California Association of Winegrape Growers (CAWG) in Sacramento, Calif., with regard to the RMAX. “I don’t think growers have had the opportunity to fully consider the wide number of potential uses for UAVs. So, as more UASs are approved for use in agricultural settings, I think we’ll see greater creativity in the application of UASs to address real world problems and challenges.”

When it comes to vineyard use specifically, Aguirre wonders if the RMAX’s capacity might hinder its potential.

“The Yamaha’s load capacity of 61 pounds is a significant limitation, particularly when you think about general mildew prevention and control efforts in large vineyard settings,” he explained.

That said, Aguirre further noted that it’s always good to have “another tool in the toolbox.”

“It seems to me growers will be most interested in using UASs to monitor and track vine performance during the growing season,” continued Aguirre. “UASs can help growers more quickly identify areas of vine stress related to deficiencies in water, nutrients or pest and disease pressures. The Yamaha RMAX may help growers address certain hot spots that demand quick attention, but I think most growers will continue to find land-based systems of delivering crop protection products most useful.”

Taking Flight

While Tully Stroud, an experienced drone enthusiast and PCA/viticulturist for the Monterey, Calif.-based vineyard company Monterey Pacific, Inc., finds the FAA’s exemption of the Yamaha RMAX notable; he is more curious about what’s next.

“It will be interesting to see what regulations the FAA puts forward later this year regarding small UAS under 55 pounds,” said Stroud.

Currently, to fly a commercial UAS requires obtaining an exemption under Section 333 of the FAA Modernization and Reform Act of 2012, which grants the Secretary of Transportation the authority to determine whether an airworthiness certificate is required for a UAS to operate safely in the National Airspace System (NAS).

“There exist several possibilities to build a vehicle with similar performance to the RMAX for a fraction of the cost, if you can get the Section 333 exemption,” Stroud explained.

Adding to the cost of the RMAX, says Stroud, is the current restriction of having a licensed pilot fly it. If and when the FAA grants approval for operations by non-pilots, as well as for semi-autonomous flights, he believes that usage of drones of all kinds would increase significantly.

As to the actual published cost of the RMAX in the U.S., the Yamaha’s website states: “No pricing has been established for the U.S. at this time.” On the FAQ page of its Australian website, Yamaha notes that the RMAX cannot be purchased outright, but rather acquired solely through a “fully maintained rental arrangement.”

“Overall, the biggest benefit that I can see from the approval of the RMAX is that there is now an unmanned vehicle that is legally available off the shelf for agriculture use,” Stroud said.

“I believe that when the FAA publishes the rules on small UAS, you will see a multitude of different options that can rival the performance of the RMAX, but at a small fraction of the cost,” he continued. “The real wild card in the mix will be to see who can commercialize a rugged, reliable and safe flight controller that can be used in a civil aviation setting.”

Rules and Regs

While the Yamaha RMAX was granted the FAA exemption, certain restrictions and requirements apply. Licensed pilots must maintain a line of sight with the RMAX, and cannot fly at an altitude above 400 feet. Additionally, operations must be conducted over private or controlled-access property, and cannot take place within five nautical miles of an airport.

Additionally, the FAA’s approval of the RMAX for flight was just that: The exemption was granted to the Yamaha RMAX only. Other UASs would require individual approval.

North of the Gate Competition Names Best Wines from California Counties

Lewis Grace Grenache wins top award

After judges in the annual North of the Gate Wine Competition tasted through 255 wines from across Northern California, they awarded 216 medals, including 27 gold and 10 double gold. The Lewis Grace 2013 Grenache from the Sierra Foothills was named the competition’s Best of Show winner.

The competition, held March 19 at the Sonoma-Marin Fairgrounds in Petaluma, Calif., recognizes the importance of wineries located north of the Golden Gate Bridge. The 2015 competition was judged by distinguished wine professionals, including wine writer Dan Berger, educator and Vineyard & Winery Management wine competitions director Debra Del Fiorentino, wine editor Bill McNabb, Wilfred Wong of Wine.com, wine writer Von Hurson and radio show host Larry Van Aalst.

U.S. Wine May Face Retaliatory Tariffs

World Trade Organization rules U.S. country of origin labeling rules discriminatory

By Tim Teichgraeber

On May 18, the World Trade Organization ruled that country of origin labeling (COOL) of certain meat products is discriminatory in violation of the NAFTA trade agreement, and violates WTO rules. That ruling opened the door for Canada and Mexico, the two countries that complained about the COOL labeling requirements, to impose retaliatory tariffs on a number of U.S. products beginning as early as this summer or fall.

Both the Wine Institute and WineAmerica, key industry lobbying groups, are encouraging Congress to take action to prevent the threatened tariffs against American wine and other products from going into effect. Hundreds of millions of dollars and hard earned sales gains in the Canadian market could be at stake.

“This all goes back to the 2002 farm bill, which was signed into law by President Bush. It required that certain cuts of beef be labeled according the country of origin,” explained Michael Kaiser, WineAmerica’s director for public affairs. “It took a lot of time for the Department of Agriculture to actually implement the rule. Fast forward to 2014 and after it has been implemented for a few years, Mexico and Canada filed grievances with the World Trade Organization saying it is a discriminatory practice and violated the NAFTA trade agreement.”

The WTO has ruled on more than one occasion that the labeling requirement is, in fact, discriminatory and the United States will either have to change the rule, or the Mexican and Canadian governments will be allowed to implement retaliatory sanctions in the form of tariffs.

“Canada last year put out the list of possible retaliation products, a whole host of products, and wine was on the list. This isn’t necessarily the final list – that will be coming out this summer, unless Congress is able to ‘fix’ the issue,” Kaiser said.

He noted that Canada and Mexico have 30 days from May 18, the date of the last ruling, to submit a proposal to the WTO regarding their losses from COOL labeling and proposed sanctions. The U.S. will then have a chance to appeal those findings or approved sanctions.

Once that last appeal is heard and ruled on, the retaliatory tariffs can be implemented. That could be in late August or early September. “Both the Canadian and Mexican governments have said that nothing less than a full repeal of the law will satisfy them,” said Kaiser.

Wine would not be the only product export hit with stiff tariffs, but because if its value, it could be hit hard. According to Kaiser, the U.S. sold half a billion dollars’ worth of wine to Canada in 2013. “There’s been a marked increase in the amount of wine sold to Canada from California, Washington, Oregon, Virginia, New York and Michigan. It’s the No. 1 foreign market for American wine.”

Kaiser points out that entry-level wines exported to Canada and Mexico might be subject to the most dramatic taxes. The effect would be to drive wine consumers in those countries to otherwise comparably priced imports from New Zealand, Chile or South Africa. Loss of revenue for American wineries would be immediate, but lost shelf space can also be difficult and costly to regain even after the penalty tariffs are removed.

There is some room for optimism. While some cattle farmers would very much like the COOL labeling laws to stay in place, there seems to be a bi-partisan Congressional understanding that these proposed Canadian and Mexican sanctions, if put into practice, would do serious damage to several other American industries. On May 20, the House Agriculture Committee passed a bill that would repeal the COOL legislation by a 38-6 margin. If the same bill passed both houses of Congress, it would head off the trade sanctions.

“We’re hoping the House can get something done by mid-June, and that the Senate will take it up in July, so that by the time the sanctions would be implemented, the issue will have been resolved,” said Kaiser.

California Subject to Mandatory Water Reductions

Agricultural water users required to report more information to state regulators

By Tina Caputo

It was no joke. On April 1, following the lowest snowpack ever recorded, Governor Edmund G. Brown Jr. directed the State Water Resources Control Board to implement mandatory water reductions across California to reduce water usage by 25%. This was the first time in 75 years that no snow whatsoever was found in the California Department of Water Resources’ manual snow survey in the Sierra Nevada, and the first time in the state’s history that mandatory water restrictions of this magnitude have been undertaken.

"Today we are standing on dry grass where there should be five feet of snow,” Governor Brown said at the April 1 press conference. “This historic drought demands unprecedented action."

According to Governor Brown’s office, water savings under the new plan will total approximately 1.5 million acre-feet over the next nine months. In addition to saving water, the mandate will increase enforcement to prevent wasteful water use, streamline the state's drought response and invest in new technologies to make California more drought resilient.

While many of the requirements in the Governor’s executive order apply specifically to private residences, it also addresses water usage by campuses, golf courses, cemeteries and other entities. Depending on the source of water used to irrigate their lawns, wineries may be subject to the new restrictions.

“If (the water) is from a local provider of some kind, the provider will be under mandatory rationing restrictions,” said Richard Stapler of the California Natural Resources Agency. However, he added, “If a vineyard gets its water from an onsite well from groundwater, the regulations for those were just passed by the legislature last year and will not go into full effect for several years. That said, water tables are dropping lower and lower due to lack of precipitation, so a vineyard operator would then want to start making choices about what’s the best use for what water is available to them – ornamental lawns or their crops.”

For Charles Krug Winery in St. Helena, Calif., whose “Great Lawn” is often used for tasting events, conservation efforts are already underway. "We started water conservation practices more than a year ago when we made the decision to turn off the water feature on our road sign, and to create a more drought-friendly front lawn outside of our tasting room,” said Jeff Richardson, vice president of operations. “We are currently finalizing an overall plan for further reducing our water use by at least 25%."

Under Governor Brown’s mandate, agricultural water users will be required to report more water use information to state regulators, increasing the state's ability to enforce against illegal diversions and waste, and unreasonable use of water under the new order. The Governor's action also strengthens standards for Agricultural Water Management Plans submitted by large agriculture water districts and requires small agriculture water districts to develop similar plans.

The order will also incentivize promising new water-efficiency technologies through a new program administered by the California Energy Commission.

Central Coast Winemakers Discuss the Diversity Issue

Variety an advantage as consumers seek out new wines

By Laurie Jervis

The temperate climate of California’s Central Coast makes the region alluring to winemakers who farm a diverse palate of wine grape varieties. But is the lack of varietal specialization a marketing disadvantage?

As part of the Central Coast Insights program, hosted March 12 in Paso Robles, Calif., by the Wine Industry Symposium Group, four winemakers shared their observations during a panel entitled “Central Coast Diversity: Blessing or Curse?”

Matt Kettmann, Central Coast critic for Wine Enthusiast and senior editor at the Santa Barbara Independent, led the panel, which included Marta Kraftzeck, winemaker for Scheid Vineyards; Tim Snider, president of Fess Parker Winery & Vineyard; Karen Steinwachs, general manager/winemaker of Buttonwood Farm Winery & Vineyard and Seagrape Cellars; and Mike Sinor, winemaker at Sinor-LaVallee, director of winemaking for Ancient Peaks and consulting winemaker for Center of Effort Wines.

Scheid is located in Monterery County, and Sinor’s various projects are in San Luis Obispo County. Steinwachs and Snider both work in Santa Barbara County.

The panel’s consensus: Consumers are willing to explore lesser-known wines such as Albariño or Gruner Veltliner when they understand how select grape varieties thrive in designated American Viticultural Areas (AVAs) throughout the Central Coast.

The detail with which a winemaker, tasting room associate or distributor describes a particular AVA’s merits – be they warm days and cool nights for Bordeaux varieties, or foggy, temperate weather ideal for Pinot Noir and Chardonnay – helps sell consumers on wines, panelists explained.

“The more we can market how specific AVAs are known for specific varietals, the better off we will be,” Snider said. His winery, he noted, rebranded its Parker Station Pinot Noir label as one that originates in the Sta. Rita Hills rather than Santa Barbara County in general.

Steinwachs, who left a lengthy marketing career for winemaking, likened selling wine to the following the premise of USPs, or Unique Selling Points: “Product, placement, price.” Utilizing the Central Coast’s AVAs to sell wine “gives us a way to explain what grows where,” she noted.

Santa Barbara County’s transverse valleys allow the coastal marine layer to flow inland, cooling down the Sta. Rita Hills at the western edge of the Santa Ynez Valley, and Happy Canyon of Santa Barbara at the east end. That allows grapes ranging from Pinot Noir and Chardonnay to Cabernet Sauvignon and Sauvignon Blanc, to Italian and Spanish varieties to all flourish, Steinwachs said.

Sinor, who focuses primarily on grapes grown in the Avila Valley for Sinor-LaVallee and in Paso Robles for Ancient Peaks, echoed Steinwachs on the benefits of diversity, thanks to microclimates and various soil types. “We have learned where to plant the varietals so they thrive,” he said.

Kraftzeck noted that Scheid farms 4,600 acres of grapes from 10 different vineyards, and she works with 34 grape varieties.

In response to a question from Kettmann about selling diversity, Kraftzeck said Scheid doesn’t find that to be an issue. “People are interested in different varieties, new wine trends, something different than Chardonnay and Cabernet Sauvignon. Gruner Veltliner does well.”

But the fact remains that most wine does not sell itself, and sommeliers and the public alike still may need convincing when it comes to a particular varietal, the panelists noted.

“We do have to be pretty smart about segregating things (grapes)” in terms of focus marketing, Steinwachs said. “At Buttonwood, we call ourselves ‘franc and blanc,’ because Cabernet Franc and Sauvignon Blanc are the two biggest plantings at our vineyard.”

Each of the four panelists works in some capacity with the Central Coast’s most prevalent grape varietals – Chardonnay, Pinot Noir, Cabernet Sauvignon and Syrah.

Kettmann asked the winemakers what each believes will be the “next big grape.” Sinor’s choice was Albariño, and Snider hailed Grenache. Steinwachs chose Cabernet Franc, and Kraftzeck couldn’t pick just one, so she chose two: Grenache and Grenache Blanc.

The winemakers then asked Kettmann for his choices for the next big wine grape: “Grenache blanc, and Riesling, when done dry. Red? Grenache, and Carignan, especially old-vine Carignan,” he said.

Vineyard Labor Shortage Expected to Worsen

Mexico’s agricultural labor force decreasing by 150,000 per year

By Sean P. Sullivan

At this week’s Oregon Wine Symposium in Portland, Ore., Ed Taylor, professor of agricultural and resource economics at UC Davis, painted a bleak picture of the long-term agricultural labor supply in the United States. Taylor said that Mexico’s agricultural labor force, which provides a large percentage of the workers in the U.S., is currently decreasing by 1% per year.

“That’s a big decrease,” he said, noting that there are 150,000 fewer farm workers coming out of rural Mexico each year. Taylor said this will directly affect U.S. agricultural labor supply. “We could be looking at a decrease of 10,000 Mexican workers on U.S. farms each year,” he said.

Taylor’s conclusions are based on a long-term study of a representative sample of Mexico’s rural agricultural labor force. The research found that there are a variety of factors contributing to the farm labor shortage, including increased education in Mexico.

“Nothing pulls a kid out of farm work more quickly than a little bit of schooling,” said Taylor, adding that the average years of education in Mexico now stands at nine and a half years, a dramatic increase from previous decades. Mexico’s fertility rates, which have converged with those in the U.S., are also having an impact. “Farm families are getting smaller,” Taylor said. “That means that there are fewer kids growing up who can potentially become farm workers.”

Meanwhile, Mexico’s own agricultural needs are growing, outstripping supply such that the country is importing workers from Central America. This decreases pressure on agricultural workers to look for work elsewhere. “We have to more than match the value that workers are producing in Mexico in order to induce them to come here,” Taylor said.

Concurrently, Mexico’s non-farm labor economy is rising, providing workers with better opportunities at home. “When you’re getting educated while the non-farm economy in Mexico is growing, it’s a no brainer that you’re going to take your education to the non-farm jobs instead of going out and picking crops,” Taylor said.

Taylor stated that intervening factors, such as economic conditions in the U.S. compared to Mexico, U.S. immigration policy, and border violence can have a short-term effect on the situation, but the long-term prognosis would remain the same. “Hoping that the workers will come back, that is a non-starter based on what we’re seeing in these data,” he said.

The research indicates that certain factors, such as increasing wages, could help encourage workers to come to the U.S. “As farm wages go up, people’s likelihood of doing farm work also goes up,” said Taylor. He noted that wineries can expect vineyard labor costs to continue to increase in the coming years. “The costs aren’t going to go away,” Taylor said. “They are going to keep going up.”

While some have hoped changes to U.S. immigration policy could affect the equation, Taylor said it would not provide a long-term solution to Mexico’s rapidly changing demographics. “It’s only one of many intervening variables against a backdrop of bigger things that are happening,” he said of immigration reform.

Rather, Taylor said the long-term solution is to look for ways to make vineyard work more efficient. “The bottom line here is that you have to find ways to save on labor as labor costs go up and labor becomes more scarce,” he said. “We need to prepare a farm work force that’s going to look very different from the one that we have today.”

Proposed change in appellation labeling laws would have broad impact

Adjacent states would be able to use another state’s appellations

By Sean P. Sullivan

On Feb. 9 the Alcohol and Tobacco Tax and Trade Bureau (TTB) published a proposal in the Federal Register that, if approved, would significantly alter the nation’s wine labeling laws. The proposal, issued in Notice No. 147, would allow wineries in adjacent states to use the other state’s appellation names on wine labels.

Under existing law, wineries may only use an appellation name on a label if the wine is “fully finished” in the state in which the appellation lies. That is to say, California wineries, for example, cannot vinify Willamette Valley fruit and use this appellation on the label unless the wine is “fully finished” in Oregon. If the TTB proposal becomes law, wineries in any adjacent state would be able to use the other state’s appellation names as long as it is a single-state appellation.

The proposal was driven by the approval of The Rocks District of Milton-Freewater appellation, which was issued on the same date. The Rocks District is an Oregon appellation that is a sub-appellation of the Walla Walla Valley, which spans the Washington-Oregon border. Due to existing laws, Washington-based Walla Walla Valley wineries – which constitute the vast majority of wineries in the area – would be unable to use The Rocks District on their labels.

In addition to addressing the problems presented by the approval of The Rocks District, the government wrote that the intention of the proposal is: to provide wineries with increased flexibility in where wines are produced and how they are labeled; to give consumers more accurate information about the origins of wines; and to allow growers to have more potential buyers.

Initial comments on the proposal have been mixed. Nicolas Quille, general manager of Pacific Rim Winemakers in Washington, sees the proposed changes as beneficial. Pacific Rim currently purchases fruit from the Willamette and Umpqua valleys. At present, the winery is forced to use an “Oregon” designation on its labels rather than the more specific Willamette Valley and Umpqua Valley designations.

“The change of rule would allow us to more accurately reflect the origin of our wines to our customers,” Quille wrote in response to the government’s proposal. He went as far as to suggest that the geographic limitations be removed completely.

Others wrote that the TTB’s proposal was too broad. “To allow an unfettered adjacent state rule has the potential to dilute the identity and meaning of AVAs within the United States system, and could impact export markets’ opinion of American wines,” commented Casey McClellan of Seven Hills Winery in Walla Walla, Wash.

Of note, the government’s proposal would only apply to single-state appellations, not multi-state appellations. “(W)inemakers who label their wines with a multi-state AVA appellation of origin already have the flexibility to use winemaking facilities, including custom crush facilities, in at least one other state if they choose, unlike winemakers who label their wines with a single-state AVA appellation of origin,” the proposal stated. However, the TTB encouraged comments as to whether the changes should also apply to multi-state appellations as well.

WAWGG Conference Highlights New Processing Technology

Students at Walla Walla Community College are getting their hands on new technology that most professional winemakers only dream of using. Tim Donahue, director of winemaking at the college's Center for Enology & Viticulture, revealed the results of two years of trials conducted by his students using VitiSort, a prototype optical sorter designed and built by Key Technology in Walla Walla, Wash.

He presented the information during a session covering new processing technology – which also included programmable fermentation tanks and self-cleaning tanks – held Feb. 10 at the annual Washington Association of Wine Grape Growers (WAWGG) conference in Kennewick, Wash.

"Optical sorting isn't a whole lot different than hand sorting," Donahue said. "But it saves some poor souls from the delirium of standing at a shaker table for hours on end."

The key learning point for students, he said, is how optical sorting fundamentally changes how wine is made.

"It changes the way you react to wine, how long you do punchdowns, fermentation temperatures — basically all the parameters of winemaking," he said. "It's a really great tool to show that to students."

What Donahue showed to the professionals at the WAWGG conference was startling. He and his students ran various trials with and without the optical sorter. Some of their initial findings included:

A 25% reduction in tannins using the sorter.

Lower alcohol in wines using the sorter, likely from the removal of dehydrated fruit.

Higher fermentation temperatures.

No significant changes to juice chemistry or microbiology.

Damaged fruit can be at least partially recovered using sorter.

Working on a much larger scale with new technology is Tim Jones, a winemaker at 14 Hands Winery in the Yakima Valley town of Prosser. 14 Hands is Washington's second-largest winery and is owned by Ste. Michelle Wine Estates.

In March 2012, the Ste. Michelle team began working with Spokane Industries to design and build a self-emptying tank. Ten of the new tanks were delivered to 14 Hands in time for the 2013 harvest, and due to how well they work, more could be on the way, Jones told attendees.

Each tank has a 30,000-gallon capacity and can handle 100 tons of fruit at a time. In the past, the facility has been able to process about 9,000 tons of grapes per harvest. With the new tanks, it can now take on twice that with no significant overhead, no increase in labor costs and higher safety standards.

The new tanks use sweepers to remove pomace easily and safely. During his presentation, Jones showed videos of the tanks being self-cleaned in less than an hour.

The tanks also use three methods for doing pumpovers: rack and return, pumps and Pulsair. The 14 Hands crew focused primarily on the latter, which uses nitrogen bubbles to move the 30-ton caps. Winemakers at 14 Hands and Columbia Crest have long used Pulsair for mixing tanks, and they see this system as a great way to manage such large loads of fruit.

Tech at New Wine Science Center

Richard Larsen, research winemaker at Washington State University, will be using much smaller tanks at the new Wine Science Center when it opens this summer on the campus of WSU Tri-Cities in Richland.

The $23 million facility is through construction and now is being prepared for students and researchers to occupy it by the time classes begin in August. It was built by the city of Richland on land owned by the Port of Benton adjacent to the campus along the Columbia River. The land and building are being handed over to WSU, and the Wine Science Center will become part of the university's viticulture and enology program.

During the technology session, Larsen took participants through a virtual tour of the facility, with a focus on the 192 new fermentation tanks. Each tank is 200 liters in size, and each workstation will have eight tanks, Larsen said. The tanks are being built by Spokane Industries and are being electro-polished, which will make cleaning easier.

Larsen explained how the Integrated Fermentation Control System (IFCS), built by Cypress Semiconductor, will work. Each tank will have an IFCS, which can track Brix every five minutes, giving winemakers a real-time view of the fermentation curve. It also constantly measures cap and must temperatures, and while it cannot do automatic punchdowns, it can do pumpovers. Winemakers can program them to occur as often as every 10 minutes. The tanks are heated and cooled by water rather than glycol, making them more environmentally friendly, Larsen explained.

He pointed out that the tanks are modeled after those the University of California-Davis installed in 2011, and the two universities will have opportunities to run virtual side-by-side experiments.

Andy Perdue is editor and publisher of Great Northwest Wine, a news and information company. He's also the wine columnist for The Seattle Times.

Galloni Aims to Create ‘ESPN of Wine’

International Wine Cellar purchase positions Vinous as significant player in wine criticism

By Sean P. Sullivan

When Vinous purchased International Wine Cellar (IWC) last November, it created something of a wine criticism supergroup, with IWC founder Stephen Tanzer joining Antonio Galloni – former lead critic for The Wine Advocate – as partner, editor-in-chief and critic. The rest of the IWC editorial team also came on board at Vinous, providing the website Galloni founded in 2013 with a stable of writers that covers nearly all of the world’s major wine regions.

“The whole idea starting Vinous was to build a platform of the best and brightest voices out there,” Galloni told Vineyard & Winery Management. “As I thought about who we wanted to have as part of our team, I thought of IWC. I really respect all of the writers singularly but when you put them together, it’s a really strong team and the overlap with my work was minimal.”

In addition to adding a respected group of writers, the purchase also made Vinous home to more than 1,000 articles and 180,000 professional reviews spanning 30 years. According to Blake Gray of The Gray Report, this was a critical part of the purchase. “That back catalogue of ratings is really valuable,” he said. “People search for older wines and buy older wines all the time and they want ratings and tasting notes for them. It’s something that Wine Spectator has and The Wine Advocate has, but Galloni didn’t.”

Galloni, who left The Wine Advocate shortly after Robert Parker gave up editorial oversight of the publication in December of 2012, said his goal with Vinous is to combine traditional wine criticism with modern technology, creating a user experience that revolves around engaging, high-frequency content.

“I want Vinous to be for wine what ESPN is for sports – a channel that’s on all the time and is completely engaging,” Galloni said.

Vinous typically publishes five days a week and provides a style of content that contrasts with traditional print-based wine media. “There’s a big distance between the author and the reader when you’re picking up a magazine,” Galloni said. “I want people to be inside. I want them to feel like they are part of the whole story as it unfolds.” To do this, Vinous puts a premium on video and images in addition to articles and reviews.

“The Advocate is essentially a newsletter on the Internet,” Gray said. “Wine Spectator is still a magazine. Galloni is the only one who is really thinking of his site predominantly as a website, and it’s a very dynamic site.”

Of course, wine criticism is defined by its influence. Robert Parker became a household name because his reviews moved wine. With its new group of writers and focus on both traditional and modern content, can Vinous come to exert a similar influence?

“Until Parker retires, The Advocate is going to be the big dog in online rating sites,” Gray said. “But Galloni is positioning himself for the future.” Gray added that having another outlet for wine criticism can only benefit wineries. “Having another voice is a good thing,” he said. “It gives more places where somebody might love their wine.”

Central Coast Water Studies Released

High nitrate levels found in some regions

By Janet White

New water quality results for surface water and ground water on the Central Coast offered good and bad news for growers at the Sustainable Ag Expo, held in San Luis Obispo, Calif., in late November.

In the most extensive release of surface water findings to date, Sarah Lopez, technical program manager of Central Coast Water Quality Preservation Inc., reported that detections of two organophosphate insecticides had declined dramatically from 2005 to 2013. The insecticides were chlorpyrifos and diazinon, neurotoxicants once widely applied to an array of crops, including vineyard, vegetables and berries.

In the same presentation, however, Steve Deverel, hydrologist working for the Central Coast Groundwater Coalition (CCGC), reported that tests of hundreds of Central Coast domestic wells in 2013-14 revealed high nitrate concentrations throughout the Salinas Valley, and in farming regions in the Pajaro, Gilroy, Hollister and Santa Maria groundwater basins.

The first findings relate to surface waters at the bottom of watersheds, and reflect a significant drop in insecticides that can be damaging to human health and aquatic organisms. The second findings characterize nitrates in domestic wells that are a source of drinking water, a supply generally within 400 feet of the surface. Nitrate at unsafe levels has been linked to infant death, cancer, and thyroid and reproductive disorders.

The data came from two grower coalitions, both formed in response to requirements by the Region 3 Central Coast Regional Water Quality Control Board. When that board renewed the agriculture waiver in 2012 for a five-year period, it called for increased monitoring, management and reporting by growers.

Preservation Inc. has performed surface water monitoring since 2005, but monitoring of groundwater is relatively recent, an outcome of the agricultural waiver of 2012. Growers formed CCGC in 2013 to perform that monitoring. Growers not in CCGC are required to test their own wells.

He said preliminary results from studies he is completing this winter seem to indicate that much of the accumulation of nitrate has occurred in recent decades, primarily since the 1980s.

Deverel and his team at Hydrofocus Inc., based in Davis, are using radioisotope testing to determine the age and source of nitrate contamination. They are analyzing findings from 830 wells in all, 588 of which the coalition sampled directly. They also obtained recent data from local and state government agencies.

“The main source of nitrate in this region is synthetic fertilizer,” Deverel added. “Very little comes from septic systems, dairies or pharmaceuticals. In addition, data show higher effects in the last 10 to 20 years.”

While previous studies have shown nitrate contamination in California groundwater and wells, this is the most extensive study in the Central Coast to date, and the first in this region to provide extensive data on age and source of nitrate.

Parry Klassen, director of the CCGC, observed, “Our growers, in every case where there was nitrate contamination, responded by notifying employees and others using the wells for drinking water. They all voluntarily offered them either bottled water or reverse-osmosis treatment. Many had already been doing so for years.”

Kevin Merrill, vineyard manager at Mesa Vineyard Management in Santa Maria, said, “Close to 100% of irrigation on the Central Coast relies on well water. We know that nitrate accumulates over time, and so growers are now testing well water to see what nitrogen is available and then using that as part of their nitrogen budget. Also, a very high percentage of growers now rely on drip irrigation, allowing more precise application of water and fertilizer. There is almost no surface runoff.”

Surface water readings from 2005 to the present taken by Lopez and her team show declining trends in surface water nitrate concentrations in many watersheds, but some other water bodies show increasing trends. Surface water readings reflect a combination of past and present practices. For instance, some nitrate in surface water is from recent applications, but since much irrigation water is drawn from wells, irrigation runoff can also reflect nitrate that has accumulated in groundwater over decades.

“Decreasing trends currently outweigh increasing trends in nitrate,” she said. “While this is encouraging, we have to wait to see if this pattern continues in order to confirm that it is the result of changed practices.”

While vineyard owners apply nitrogen fertilizer, in general they apply less than growers of other crops because too much nitrogen leads to excessive vegetative growth and poor-tasting wine.

However, vineyards, along with row crops and tree crops, can be significant sources of sediment from soil erosion. Pesticides and applied nutrients can adhere to soil particles and, through erosion, be washed into surface waters in runoff.

Randy Krag, vineyard manager for Beckstoffer Vineyards in Lake County, noted, “If we maintain cover on soil and employ smart design and management of roads, we can greatly reduce erosion, which is a major concern in water quality in our region.”

Agricultural waivers were initially established as part of the Clean Water Act of 1972, but subsequent California legislation called for them to sunset in 2001. Since then, all nine regional water control boards have required growers to renew waivers every five years, and wastewater discharge requirements for growers have increased steadily in each version.

Many growers address these monitoring and management requirements through coalitions. Owners of 95% of the Central Coast’s irrigated farmland have joined Preservation Inc., the surface water monitoring group established in 2005. Growers representing 50% of the acres in the Central Coast region have joined the more recently formed Central Coast Groundwater Coalition, starting in 2013.

When nitrate is not used by plants, volatilized or otherwise metabolized by soil organisms, it can run off in field drainage or percolate through soil from the surface to the groundwater. Movement to groundwater is sometimes more rapid but usually occurs over decades. Even if nitrogen fertilization stopped tomorrow, it would take decades before a discernible effect appeared in groundwater, Deverel said. Grower concerns include how to show improvement in nitrate concentrations in the five-year period before the current agricultural waiver expires in 2017.

“One of the things missing in these five-year waivers is a recognition of what is possible in that time,” said Merrill of Mesa Vineyard Management. “Five years isn’t long enough to understand what’s going on and how to fix it. We need to get out of the regulatory frame of mind and ask ‘How do we work together to fix these things?’ We already know there’s a problem.”

Another concern of researchers and growers alike is the unintended effects of chasing one pollutant after the other, forcing growers to switch to other materials.

“It’s true that organophosphates have gone out of use because the water board said we couldn’t use those. But as a result, the use of pyrethroids and neonicotinoids has continued the same or gone up. These are the unintended effects, and we have to be careful how we look at it,” and Merrill.

Lopez noted, “My concern is that in regulating pollutant by pollutant, we lose the ability to look at overall trends and the whole picture. It is more in the interest of water quality to focus on controlling off-site movement of all applied products, rather than targeting this one or that one for elimination, and then moving on to the next one.”

Krag noted that growers across the state are watching what happens in other regions and subregions. “Here in Region 5 we’re especially watching San Joaquin County,” he said. “New regulations have already been rolled out there, and based on that experience, will be extended to all of Region 5 over a few years. We expect new rules by 2017. Nutrient management plans will probably be part of the new regulations regionwide.”

Speaking at the Garagiste Festival in Paso Robles on Nov. 8, Steve Lohr, chairman and CEO of J. Lohr Vineyards & Wines and former chairman of the Paso Robles Wine Country Alliance, explained the challenges of the TTB application process. From the time of submission, it took seven years for Paso’s petition to gain approval.

While there was talk of sub-dividing the region in the early 2000s, Lohr said local growers and vintners decided to hold off until further research could be done. “We didn’t want to push it,” he said. “We decided, ‘If we’re going to do this, let’s do it right.’”

In 2006, the Paso Robles Wine Country Alliance formed an independent committee of 59 growers and vintners, which met at J. Lohr during an 18-month period to hash things out. The group also enlisted lawyer Richard Mendelson of Dickenson Peatman & Fogarty, who had helped sub-divide the Napa Valley, and geographer Deborah Elliott-Fisk of UC Davis.

“The most important part was the collective experience of these 59 growers and vintners who had spent 10, 20, 30-plus years with our soils,” Lohr said. In addition to holding meetings, the committee visited vineyard sites and tasted wines from the proposed AVAs to make sure their character matched what was being described in Paso’s petition.

“It was all about the science,” Lohr said. “Sometimes people would say, ‘I really think I ought to be in this district,” but then we went out and visited the farm, and in some cases we dug backhoe pits,” to show them why they belonged in another AVA.

A year and a half later, the group submitted its 1,000-page petition to the TTB.

“We didn’t want to make the same mistake that many other appellations have made, and that was to do it piecemeal,” Lohr said. “We didn’t want to submit one sub-appellation here and another one there.”

Creating the petition turned out to be the easy part of the process. Soon after it was submitted, the U.S. economy tanked, and the TTB had more important business to attend to. The Paso petition was shelved.

“Then the TTB got to questioning if it even made sense to have sub-AVAs,” Lohr said. “After all, if you have an AVA, it’s been federally determined that this is a unique winegrowing area. So how can you make unique more unique?” Another year and a half passed while the TTB mulled over whether or not to continue granting sub-AVAs.

That agency eventually came to its senses about sub-AVAs, and all 11 AVAs were approved – seven years after the petition was filed. To prevent the Paso Robles AVA from being overshadowed by any of the sub-AVAs, the region opted for a conjunctive labeling policy, requiring producers to include Paso Robles on their labels in addition to any sub-AVAs.

Now the “fun part” will begin, Lohr said, referring to the task of educating trade and consumers about the different regions. “We have a great story to tell now,” he said. “We’re able to enrich and refine the stories we’ve been telling for years or decades.”

Wine Still Dope in Colorado and Washington State

But will sales slump with the legalization of recreational marijuana?

By Jennifer Strailey

Coloradoans like wine, consuming 24% more, or 3.1 gallons per capita annually vs. the national average of 2.5 gallons. But many of them also like weed. According to the state Department of Revenue, recreational marijuana dispensaries garnered more than $14 million in sales in just the first month after legalization.

Will access to recreational marijuana in Colorado and Washington state cause the thriving wine economies in those states to go to pot?

“We’ve been asking that question continually,” said Micki Hackenberger, executive director for the Wine & Spirits Wholesalers of Colorado. “Is the sale of recreational marijuana going to impact alcohol sales?”

Recreational pot was legalized on Jan. 1, 2014 in Colorado, and the state has since issued 136 licenses to dispensaries.

While Hackenberger said it’s simply too early to tell what, if any, impact recreational marijuana use will have on the sale of adult beverages, the Denver-based association has begun to track the data. It recently pulled excise tax collection records on beer, wine and spirits for the first four months of this year and compared them to the previous two years.

“What we found was that beer and spirits taxes have gone down a little,” she noted. “Wine (tax) has actually increased.”

However, as Hackenberger points out, alcohol consumption is cyclical. Only time will reveal whether the excise taxes, which in Colorado are paid when the product is delivered to the wholesaler, were an anomaly in early 2014, or indicative of a real trend.

“It’s intriguing enough that we’re exploring some kind of data collection (beyond excise taxes) – perhaps a poll that we could potentially commission,” continued Hackenberger.

However, she admits that polling people could be delicate work. “It’s difficult to ask people, ‘So, are you smoking more pot now and not having a cocktail?’” she said.

Impact on Denver Wineries

At Balistreri Vineyards, one of the city’s bustling urban winery tasting rooms, sales have never been better. “Our sales continue to increase,” said Julie Balistreri, one of the winery’s owners. “We haven’t had any impact from the legalization of marijuana. We think we have a different clientele.”

As Balistreri sees it, recreational marijuana has only interfered with her business once. It was earlier this year, when the Denver Merchandise Mart, located a few blocks from the winery, hosted the 4/20 High Times Cannabis Cup. The two-day event, which attracted more than 30,000 attendees, stopped traffic and made it difficult for would-be wine tasters to reach the Balistreri tasting room.

Based on Colorado tax records, this July marked the first time recreational marijuana sales outpaced medical marijuana sales. Both were over $28 million, with recreational marijuana sales closing in on $29 million.

In spite of these noteworthy numbers, Jeanne McEvoy, president and CEO of the Colorado Licensed Beverage Association, in Commerce City, Colo., also believes that while it’s too early to know for sure, wine sales don’t appear to be taking a hit from pot.

“In conversations with our members across the state, they have not reported any decrease or negative impact,” she said. “Most folks are up single- or double-digit sales increases over last year.”

If anything, the Colorado wine industry is facing far more competition from the growing number of craft breweries and distilleries in the state. “Craft distilleries are growing by leaps and bounds,” said McEvoy. There are 260 breweries and 50 craft distilleries in Colorado.

In Denver’s hip Lower Highlands (LOHI) neighborhood, the upscale wine and spirits shop Mondo Vino is a mere half-block from a medical marijuana dispensary. However, Owner Duey Kratzer hasn’t seen any impact on wine sales.

Recent changes in his business have more to do with the cocktail and craft beer craze than Denver’s penchant for pot.

Over the last three to five years, as consumer tastes have changed, so too has Mondo Vino’s inventory. “We used to be 85 to 90% wine, and the remainder beer and liquor,” Kratzer said. “Now we’re 70% wine.”

Washington Not Worried

While Colorado has experienced almost a year of post-legalization life, Washington is in the earliest stages. The state has approved 60 licenses for recreational dispensaries, and allotted 21 of them for outposts in the Seattle area, but thus far, the city boasts a single dispensary that is open for business.

“I’ve been at this for two years, and I haven’t heard anyone mention concerns about competition from dispensaries,” said Mikhail Carpenter, spokesperson for the Washington State Liquor Control Board. “I don’t think (the wine industry) has anything to worry about.”

Michaela Baltasar, communications director for the Washington State Wine Commission in Seattle, agrees.

“We’ve seen a 15% growth in wine sales in FY14 over FY13,” she said. “I think we’re a bit behind Colorado, though, when it comes to the details of our legislation and how legalization of marijuana in Washington is going to play out.”

Lessons from the Global Wine Wars

Wine economist Mike Veseth identifies factors that will shape the future of the U.S. wine industry

By Deborah Parker Wong

In addressing the 23rd annual Wine Industry Financial Symposium, held on Sept. 23 at the Napa Valley Marriott, wine economist Mike Veseth presented a 30,000-foot view of both short- and longer-term scenarios that could spell boom or bust for domestic winegrowers and producers. Armed with the latest industry data courtesy of Nielson, as well as Rabobank and feedback from his popular blog, WineEconomist.com, he provided attendees with insights into the current state of the global wine industry.

Veseth tackled the broad topic by breaking down his insights in to three areas of interest: the economy, salient trends and the ever-shrinking supply chain.

Bird’s Eye View

Few would argue that the global market for wine is now intensely competitive and becoming increasingly more so. Veseth pointed out that over the last six years there has been a significant restructuring of the industry with a decrease in the acreage devoted to producing low-end supply and an overall rise in quality standards. We see this evidenced by ongoing vine-pull schemes and the shift toward premium-priced wines by producers such as the Australians, for whom price-cutting left little margin for error.

Coined the “Reset Period” by Veseth, the situation is marked by a drop in consumption in the mature markets of Europe and by slow and steady growth in North America and northern Europe. “The U.S. is ‘the’ market,” Veseth stated, “and the wine producers of the world are looking to find a home for their products here.” He also pointed to South Africa, which is regrouping using a “multi-market” approach for another go at U.S. consumers and other growth markets.

Innovation in the craft beer and cider industries, however, is proving to be a proverbial fly in the ointment for growing wine sales in the United States. Veseth cited the popularity of products such as Midas Touch, a saffron-scented, honey-infused beer-mead hybrid produced by Dogfish Head Brewery in Delaware, and apple and fruit ciders such as those made by the Blue Mountain Cider Company in Oregon. Blue Mountain uses its production facility year-round to make a portfolio of products that range from dry to sweet.

Wine marketing is also diversifying as companies pursue lifestyle strategies to market wine experiences, and “enotourism” is being touted globally with shows such as Australia’s “The Food Lovers’ Guide to Australia,” a hybrid format that combines the interests of the Food Network and the Travel Channel.

Spending More for Better Quality

Consumer confidence in the U.S. is once again on the rise. With 15.5% growth in the $20 price segment and double-digit growth in the $12 - $14.99 segment over the last six months, premiumization now means that consumers are once again willing to spend more for better quality. Veseth points to the brand ladder replete with higher-priced brand extensions as an effective means of upselling to Baby Boomers.

However, he cautions that the strategy hasn’t proved to be effective for experimental Millennials, who are responding to non-traditional marketing cues. Alternative branding that eschews traditional images or associations and gender-specific products such as Anew Riesling, a brand designed for and marketed specifically to women, have found better footing with this demographic.

Shortening the Supply Chain

Referred to as disintermediation, the move to reduce the number of hands that products pass through on their way from producer to consumer is clearly changing the face of the industry.

Shortening the supply chain and putting the squeeze on the three-tier system are winery-direct sales to retailers – as in the case of Costco’s Kirkland brand and BevMo’s robust private label program – direct-to-consumer sales, and the success of online retailers such as UK-based Naked Wines, which has used private investors to fund its fast-track growth.

Meanwhile, Veseth said, a more heated battle is taking place on the global front lines, where efficiency has become first order of priority. According to the economist, a “disruptive tier” has emerged in which economies of scale achieved largely with the use of flexi-tanks are changing the power structure of the global supply chain.

Washington State Vintners Gauge Future Labor Force

By Gary Werner

Washington state grapegrowers and winemakers are justifiably proud of their impressive trajectory during the past decade. Vineyard area has nearly doubled to almost 50,000 acres, and bonded winery numbers have more than tripled to over 800. But industry leaders are curious about whether they can sustain such growth. Are there enough skilled workers coming down the training pipeline?

To answer that question, a consortium of the state’s agricultural colleges hired Prosser-based Agri-Business Consultants to complete an industry-wide employment and educational needs assessment – the first since 2001. The results point to a broad spectrum of job estimates for the year 2018. At the high end, the industry will require almost 6,500 new workers; but even the low estimate points to an additional 2,200 full-time equivalents during the next four years.

Numbers don’t mean much in isolation, so what is the context? First, it’s worth noting that the overwhelming majority (93%) of these roles are not expected to require post-secondary training. It’s the remaining 7% – about 470 new positions – that demand the attention of state viticulture and enology educators. Can Washington State University (WSU) and community colleges in Yakima Valley and Walla Walla supply this projected demand for associate’s and bachelor’s degree graduates? It depends.

Agri-Business Consultants developed its growth estimates from two factors. The low estimate – 5.4% – is based on average vineyard acreage expansion in Washington since 1999. The high-end figure – 12.3% – is based on average growth in bonded winery numbers here over the same 14 years. If actual industry growth follows the former estimate, about 32 new graduates with associate’s and bachelor’s degrees will be required for the workforce during each of the coming four years. In this scenario, the state’s agricultural educational output will be stretched, but it should be adequate. However, if industry growth tracks the high estimate, approximately 95 graduates with A.S. and B.S qualifications will be needed each year. In that case, WSU and the community colleges will need many more resources to keep up.

Which version of the future appears more likely? “The state industry is still very optimistic about growth,” said Thomas Henick-Kling, director of the viticulture and enology program at WSU. “Large local companies like Ste. Michelle Wine Estates and Precept Brands are doing well. Plus, Gallo and others are investing here – and they all need people. I get regular phone calls asking about whether we can supply more interns.”

WSU operates the state’s sole bachelor’s degree program in viticulture and enology. Henick-Kling said the department has 70 declared majors, and graduates about 10 or 12 people each year. But that number has doubled from four years ago, and it continues to rise. One reason is that WSU now operates articulation agreements with the Yakima Valley and Walla Walla community colleges. These provide a clear pathway for students who complete two-year viticulture or enology degrees to transfer into a bachelor’s program. In fact, more than half of WSU’s current program undergrads are transfers from these community colleges. Additionally, WSU is setting up an agreement with South Seattle Community College. With all of these feeder programs, Henick-Kling said that he expects WSU’s annual graduation rates to exceed 25 students in the near future.

Such growth will go a long way to address state industry needs, but it won’t completely fill the job openings projected by Agri-Business Consultants’ high growth estimate. Therefore, talent from out-of-state institutions still will be required – which Henick-Kling and others welcome as part of a healthy industry culture. Even so, other regional leaders suggest that a significant labor shortfall may not be looming.

“I believe we’ll continue to expand,” said Todd Newhouse, the chairman of the Washington Association of Wine Grape Growers. “But there are factors on the ground that will keep things in check. For example, cabernet sauvignon offers the most growth potential for us right now; but we can’t plant cab just anywhere here. Also, we don’t have the certified plant material to grow enough fruit to create 6,000 jobs during the next four years.” Newhouse concluded, “I expect we’ll grow at a rate near the middle of the range highlighted in the new study. And that’s still an impressive pace.”

Tax Relief for Earthquake-Affected Wineries

As you no doubt know – and very likely felt – Napa Valley was struck by a magnitude 6.0 earthquake on August 24. The temblor, whose epicenter lay south of the city of Napa, in American Canyon, was the largest quake to hit the Bay Area since the 1989 Loma Prieta event. It caused one fatality, numerous injuries, widespread damage, and significant property loss.

And now it’s also caused federal action: On September 11, following urging from Governor Brown and local officials, President Obama issued a disaster declaration for the state of California, releasing several federal aid measures and a few key federal (on top of existing state) tax relief provisions that could help winery and vineyard owners recover. Let’s take a look at the assistance now available.

Casualty Loss Deduction

If your winery, vineyard, or residence experienced damage, destruction, or the loss of property as a result of the quake, you could claim it as a tax-deductible casualty loss. Doing so could provide immediate cash to help in your recovery process, but there are some limits.

As a result of the federal disaster status, a casualty loss deduction related to the quake can be claimed in either 2014 or 2013. The amount of the deduction equals the lesser of the adjusted basis of the property before the casualty or the decrease in fair market value of the property as a result of the casualty. The loss must be reduced by any salvage value and by insurance or other reimbursement you received or expect to receive. If a business or income-producing property is completely destroyed, the loss is generally equal to the adjusted basis of the property or its cost basis less accumulated depreciation.

If the property is covered by insurance, you must file an insurance claim. If you fail to do so, the casualty loss deduction is not allowed. If the insurance reimbursement exceeds the casualty amount, the gain is taxable unless the reimbursement is reinvested in similar-use property. The planning and preparation surrounding what qualifies as similar-use property is very important to accomplish the desired tax deferral.

Reinvestment must be made within two years after the close of the first tax year in which any part of the gain is realized, though the IRS will sometimes grant extensions. For a primary residence (or its contents) located in a federally declared disaster area, the replacement period is instead four years. In the case where a taxpayer invests in replacement property, any resulting tax is deferred until the replacement property is sold.

It’s important to keep in mind that if a casualty loss is deducted in one year based on an expected insurance reimbursement and the actual reimbursement in a following year turns out to be more or less than expected, an adjustment may be required.

Repairs

Under the IRS’s final tangible property regulations, the cost of repairing damaged property generally must be capitalized if the taxpayer has properly adjusted the basis of the property as a result of the loss.

Extended Tax Deadlines

Taxpayers affected by a federally declared disaster are often eligible for extended deadlines for filing and paying taxes. Extended deadlines may also be provided to taxpayers for making contributions to an IRA as well as to employers for making deductible contributions to qualified defined benefit and contribution plans.

Property Tax Relief

Home and business property owners in Napa County could qualify for a temporary reduction in assessed value if earthquake-related damage exceeds $10,000. Reassessment could mean a lower property tax bill for the period between damage and repair or rebuilding.

Section 170 of the California Revenue and Taxation Code requires the Application for Reassessment of Property Damaged by Misfortune or Calamity form to be submitted within one year of the date of damage or within 60 calendar days of the sending of the application by the Assessor’s Office. Photographs and any other documentation, such as repair estimates, should accompany the form.

Also, since the governor has proclaimed Napa County to be in a state of emergency, owners of real property and manufactured homes may be eligible under Revenue and Taxation Code Section 194.1 to delay payment of the December 10, 2014, property tax installment without penalty. If all the conditions for property tax deferral are met, and a property tax deferral claim is filed on time, the payment will be due and delinquent 30 days after a corrected tax bill is issued.

You can obtain additional information by calling the Napa County Assessor’s Office at (707) 253-4459. In addition, owners of property damaged in the earthquake can visit the Napa Local Assistance Center at 301 First Street in Napa. The center, which is open Monday through Friday from 8 a.m. to 4 p.m. and Saturday from 10 a.m. to 4 p.m., can provide information on available services for the earthquake recovery process.

Napa Rebuilds Following Earthquake

Recovery ongoing for wineries and workers

By Tim Teichgraeber

Reporters heard two resounding sentiments in the two weeks following the sobering 6.0 magnitude earthquake that hit Napa in the early hours of Aug 24. While national news media painted a picture of widespread disaster, locals pointed out that the situation could have been a lot worse. And instead of helplessly waiting for government aid to arrive, the community swiftly rose to the challenge of recovery.

Suffering an estimated $50 million in damages, many businesses were severely impacted by the earthquake, particularly those centered in and near the city of Napa. However, in preparation for the influx of new grapes, many wines had been bottled before the earthquake struck; therefore, many barrels and tanks were empty at the time of the quake, minimizing wine losses. Much of the wine in barrel-stack collapses was recoverable.

The majority of the wine lost was from the 2012 and 2013 vintages, California’s two largest-ever harvests. While some individual wineries will experience shortages because of the earthquake, it is not expected to have a significant impact on Napa Valley’s overall wine inventory.

Recovery from the earthquake has been a delicate process of salvaging whatever possible.

“It’s going to take folks weeks and months to dig out and see what the real damage is. They move one barrel and a bung falls out, and out comes the wine. It’s not good,” said Rebecca Hopkins, vice president of communications for Michael Mondavi Wine Estates. Hundreds of wine barrels were damaged at the winery’s former production facility in Carneros, sold to Kieu Hoang Winery Napa Valley in June.

Still, the situation could have been much worse. 200 mostly minor injuries in the region could have been dozens of fatalities had the quake come at a different time of day. The fact that it occurred at 3:20 a.m. meant that most people in the region were safe in bed rather than working near the 600-pound wine-filled barrels and mammoth tanks that gave way. “Oh my god… especially in those cellars,” Hopkins said. “You get people working in those barrel rooms, that stuff comes down… you’re done!”

Rising to the Challenge

Also remarkable has been the way in which the community has responded to the challenge of recovery. Days after the earthquake, the Napa Valley Vintners donated $10 million to create a fund to assist local families and businesses.

“Hundreds of homes and businesses in the local community were damaged by this disaster,” said Russ Weis, chairman of the NVV Board of Directors and general manager of Silverado Vineyards. “Those in the heart of the city of Napa, as well as south of the city – including American Canyon and surrounding neighborhoods – were especially impacted. The Napa Valley Vintners’ Community Disaster Relief Fund will provide resources and assistance to support the community as it rebuilds.”

In California, earthquake insurance is expensive, isn’t federally subsidized and includes high deductibles; therefore, most people don’t buy it. Serious structural damage can mean daunting expenses for homeowners with little equity.

Constellation Brands contributed $100,000 to the NVV fund on Aug. 29 in support of the effort. “I have seen the devastation first hand,” said Greg Fowler, senior vice president of operations for Constellation’s wine and spirits division, “But this is a resilient and collaborative community… the area will soon be thriving once again.”

Government Aid

On Sept. 2, Governor Jerry Brown petitioned the federal government to declare affected counties part of a federal disaster, which may result in additional relief funds. The following day, the Napa County Board of Supervisors requested federal disaster aid for damage estimated at $362 million in building, infrastructure and revenue loss due to business closures or lost inventory. The request must be approved by the Obama administration before federal aid can arrive in Napa.

For wineries, refunds of excise taxes paid for lost product may be part of that relief. Brown declared a state of emergency shortly on Aug. 24, shortly after the temblor hit.

In the meantime, NVV’s disaster relief fund is offering short-term assistance as locals await state and federal funding. Local businesses can also draw on the fund to help them reopen sooner, and nonprofit charities and agencies in the county can seek money to resume operations and apply for grants to better support quake victims.

“Government can only do one part,” observed Napa County Supervisor Mark Luce. “It's people like the Vintners who can really help.”

Helping Winery Employees

Some of the people hardest-hit by the disaster were winery employees, many of them residents of the city of Napa, where violent shaking caused major damage to homes. Winery workers are facing major clean-ups, property losses and structural home damage, just as they’re entering the stressful harvest season.

Some wineries are stepping up to the plate to support their employees at a time when workers are expected to give their all to the company.

One example is The Hess Collection, which suffered significant damage to the winery’s Mount Veeder facility. “A pair of 10,000 gallon tanks filled with cabernet burst and sent 15,000 cases of 2013 cabernet into the garden in the front of our visitor center,” said winery spokesperson Jim Caudill. “Barrels bounced off racks and into windows in the gift shop. In the warehouse, about 1,500 barrels tumbled, along with cased goods. Later, we would discover damage to rock walls and other structural issues, but the winery actually came through pretty well.”

Despite “millions” in damage, the winery created a fund to help employees replace and repair necessary resources such as hot water heaters and structures. “We’re hopeful of providing meaningful assistance, coordinated with the variety of other programs that are beginning to emerge,” Caudill said. “We’re also doing common sense things like providing time off for people to deal with issues (rather than deducting from their vacation time.)”

One Hess Collection employee likely to benefit from the fund is Tamara Kolbert, who heads the company’s wine club. Kolbert’s home suffered serious damage and was “yellow tagged,” meaning it can only be occupied for certain purposes. Her chimney separated from the house, her water heater flooded her garage, and numerous walls sustained cracks.

“I feel so fortunate and grateful to work for a company that would extend their hand to help us when the winery is dealing with so much devastation,” Kolbert said. “We have all pulled together to help each other during this trying time.”

Large California Harvests Create Capacity Crush

Tank and barrel suppliers turn away orders

By Sean P. Sullivan

July 22, 2014

With California coming off two record harvests in 2012 and 2013 and cluster counts this year indicating another large crop, many businesses are feeling the squeeze – stainless steel tank producers in particular.

“We've been asked to fabricate three times our normal capacity each of the last three years, and we've been maxed out on orders earlier and earlier each year,” said Scott Dapelo of Quality Stainless Tanks in Windsor, Calif. Dapelo said that it has been impossible to keep up with demand.

“For the last six months I’ve spent at least an hour each morning dealing with requests for quotes saying, ‘I’m sorry. I don’t think we’re going to be able to help you,’” he said. Dapelo noted that the company has been looking for a larger facility to help meet the increased demand.

Nathan Williams at Santa Rosa Stainless Steel in Santa Rosa, Calif., said it’s the same all over the industry. “Everybody has pretty much had the same kind of year,” he said. “We’ve turned away a bunch of work just because of how fast we booked up. Usually we can book up to harvest, maybe even into October, but this year we were pretty much booked through the end of the year by March.”

Williams expects the demand to continue at least into 2015. “I know there are a couple big jobs out there that didn’t get fulfilled, and they are already looking at next year because they didn’t get them this year,” he said.

Though the large harvests have also increased demand for oak barrels, it has not created the same types of pressures. “There’s definitely more demand but the wood is there, at least in terms of French,” said Martin McCarthy, national sales director at Tonnellerie Radoux. “There is some really, really serious pressure for American.” McCarthy noted, however, that this has more to do with competition from the bourbon industry and other issues than large harvests in California.

Christopher Hansen, general manager at Sequin Moreau, said last year’s short harvest in France helped keep supply in balance. “It allowed them to produce more barrels for the USA and ship fairly quickly,” he said. Hansen noted, however, that the demand for 2014 is less clear. “Orders are variable at times with some wineries up, many even, and some slightly down. Some wineries have said they have a lot of wine from the previous harvests and might be cutting back a bit.”

Jason Stout, international sales director at Cooperages 1912 in Napa, also said he is not expecting demand to be as strong as recent years. “There’s a lot of wine in tank and a lot of wine in the cellar. I don’t think people are going to be taking as big of a position on their ultra-premium portfolio. Sure, they are going to be making enough to keep sales full and to follow the market but are they going to make an extra 20% just because they have it? I’m not too sure about that.”

Wineries meanwhile have had to get creative managing the increased volume. “Between the 2012 and 2013 harvests, we found ourselves nearly out of tank capacity and heavily reliant on over a dozen custom crush partners,” said Duckhorn CEO Alex Ryan. “This scenario was unsustainable.” The company subsequently purchased a large facility in Hopland, Calif., to help alleviate the pressure. “We’re knee-deep in the process of getting it up and running for what looks to be yet another substantial harvest,” he said.

Erik Olsen, VP and chief winemaker at Constellation Brands, said dealing with the large harvests can be a challenge. “It requires a great deal of planning and balancing of grape purchases, bulk wine management, and finished goods inventory management,” he said.

Olsen said Constellation has adjusted in a variety of ways. “We will typically bottle more wine to free up tank space. In some situations we have contracted for outside short-term storage in specific regions where we need extra space. This year it has been more difficult to find space due to the large bulk inventory generated over the last two vintages. We are building tanks at a number of our facilities, and will also utilize tanks that had been previously decommissioned.”

“Everybody is getting stretched. We’re stretched,” said Jim Huntsinger, senior vice president of production at Trinchero Family Estates. “A lot of other wineries have contacted us this year to see if we have space that we can rent to them. So far we’ve stayed ahead of the game and we’re ready for a large crop again, but we’ll be challenged right at the end of October. I think we’re okay this year. Next year is a whole other story.”

Experts Predict Tech Trends

Annual wine technology conference separates fads from trends

By Tina Caputo

July 7, 2014

At the annual Wine Industry Technology Symposium, held June 30-July 1 at the Napa Valley Marriott Hotel in Napa, technology and beverage industry experts gathered to explore the many ways in which tech is moving businesses forward. But as technology speeds ahead, with a constant stream of new devices and applications calling for attention, how can wineries tell the trends from the fads?

Sometimes even tech experts get it wrong.

Aliza Sherman, founder of Mediaegg LLC, told attendees that at a previous conference, she and others had predicted that “augmented reality” would be the next big thing. (One example of augmented reality is Yelp Monocle, which takes Yelp information and overlays it in text form onto the real world via smartphone). Although the concept generated a lot of buzz, it never really took off.

“What we got was QR codes,” Sherman said.

A surer bet, she said, is the trend of ubiquitous marketing and sales. Marketers now have the opportunity to reach out to potential customers through devices they carry with them at all times: smartphones. The key is getting customers’ permission to communicate with them, and they will give it if they trust your company. “Every moment is a potential sales touch point, she said. “But you have to create an experience and know what kind of experience your target market wants.”

She also pointed to geo-fencing applications such as iBeacon, and wearable technology such as Fitbit, as trends that are likely to become mainstream. And while these technologies may seem invasive or even creepy, consumers will readily agree to receive messages from companies that they like. But, she noted, “You have to deliver on what they want.”

Rob Grimes, founder and CEO of Contrata, a technology advisor to food and beverage companies, continued the trend theme. "As a company you do not want to invest in a fad,” he said. Therefore, you need to be able to predict trends.

Among the top trends Grimes highlighted in his presentation were mobile computing, location-based systems (i.e. geo-fencing), and digital signage and message boards that can be placed anywhere. Rather than being developed for a single device, such as an iPhone or Android, new apps must translate across multiple devices and platforms.

The ubiquity of mobile devices such as smartphones and tablets has made connectivity increasingly important to consumers, Grimes said, and wineries would be wise to offer free WIFI to their visitors. “If you’re smart, you will give them access,” he said.

Cornell's Terry Bates Earns ASEVs First Extension Distinction Award

Commitment and a common touch helped Dr. Terry Bates, senior research associate at Cornell University, earn the American Society of Enology and Viticulture's (ASEV) first Extension Distinction Award.

Dr. Bates receives the award at the ASEV's 2014 National Conference in Austin, Texas, on Wednesday, in recognition for developing a system to mechanically prune vines to meet seasonal conditions and attain balance.

Bates was hired for a research position, but rethinking how research is best applied led to the restructuring of the program in 2009 to become the Cornell Lake Erie Research and Extension Laboratory (CLEREL). Not only did the new structure formalize the collaboration with Penn State University and overcome state borders bisecting the Erie Grape Belt, it also connected researchers more directly with the commercial growers as research collaborators and beneficiaries. The new model made everyone’s roles at CLEREL extension-like, accelerating the delivery of valuable research and information.

Still, Bates recently said he is surprised by the honor, which he sees as recognizing years of efforts by CLEREL personnel. “This award really goes to the Erie team for a decade of great work and great results for growers,” he said.

Bates led the team that came up with a method for the mechanized pruning of concord vineyards by modifying conventional grape harvesters. Combined with assessment tools and techniques, the innovation allowed growers to estimate and thin crops to suit seasonal conditions.

Growers describe Bates as having the mind of a researcher with the heart of an extension agent.

“When he is in the vineyard, his eyes gleam and you can see the excitement,” said Dawn Betts of Betts Farms in Westfield, N.Y., which has 200 acres of concord. Bates can communicate scientific concepts in a way the farmer can understand, she added. One of his early contributions reduced Nelson Shaulis's pruning formula to an easy-to-use chart.

Like a tech-savvy friend, Bates enjoys pushing introducing growers to new technology, helping them use GPS to improve vineyard management and evaluating the NDVI (Normalized Difference Vegetation Index) to measure vigor.

Developing a mechanized pruning regimen that did not appreciably hurt quality has been a boon and cost saver, Betts said, changing how concord is cultivated. Last year, Bates' method was applied to about half the concord acreage – 12,000 acres of vines setting massive amounts of fruit. Without pruning, the grapes probably wouldn't have ripened to the industry standard of 15.5 °Brix, saving growers an estimated $9 million, based upon a Cornell estimate.

Mid-season mechanized crop thinning has been adopted by growers in several other states, noted Tim Martinson, senior extension association for viticulture with Cornell.

“Terry's leadership in applied research has given concord growers a new tool for managing crop load efficiently, resulting in substantial economic benefits,” he said.

Bates received his Ph.D. in plant physiology from Pennsylvania State University in 1998 and was hired by Cornell University soon after. He has authored or co-authored more than 20 technical articles in extension and trade publications.

Oregon Winegrowers Combat Herbicide Drift

Growers association hopes to raise awareness through signage

By Sean P. Sullivan

June 2, 2014

Oregon winegrowers are increasingly concerned about the effects of herbicide drift on vineyard and other agricultural lands. To tackle the issue, they have started an educational campaign aimed at curtailing the use of these herbicides near vineyards with hopes that state regulations that restrict their use might one day be in place.

“It’s a big problem,” said vineyard manager Joel Meyers. Meyers oversees nearly 300 acres of vineyards in Oregon through Vinetenders LLC. “My vineyards have been sprayed (via drift) every season for the last three years and my clients’ vineyards on and off for the last 10. We’ve had 10 acres that have been sprayed just in the last week.”

The most common cause of drift damage in Oregon is 2,4-dichlorophenoxyacetic acid, commonly referred to as 2,4-D. A phenoxy herbicide used to control broadleaf weeds, 2,4-D acts by mimicking hormones that regulate growth and development. When 2,4-D is sprayed or drifts onto vineyards during the growing season, it can have a profound effect.

“I expect to have complete flower abortion based on what I’ve seen,” Meyers said of his vineyard that was recently affected.

Doug Tunnell of Brick House Vineyards, who has also experienced drift problems, said that the issue has become increasingly urgent as the state’s wine industry has grown. “There is more vineyard land in the state than there has ever been and as a result there are more problems with drift,” he said.

The Oregon Department of Agriculture (ODA) currently receives approximately 10 to 20 reports of spray drift per year of varying size and severity. Tunnell, however, said he believes the actual number of incidents is considerably higher. “A lot of people don’t want to put the state between themselves and their neighbors,” he said.

To help combat the issue, the Oregon Winegrowers Association is selling 18-inch by 12-inch vineyard signs that read, “HELP PROTECT THIS VINEYARD. PLEASE DO NOT SPRAY HERBICIDES LIKE 2,4-D WITHIN 350 FEET.” Tunnell, who is chair of the Oregon Winegrowers Association Land Use & Natural Resources Committee, said the signs have two goals.

“The first is to avoid what happens where a neighbor really isn’t aware of the potential danger of using these products,” he said. “The second is to try to raise consciousness and awareness that this is a real problem for sensitive plants.”

Tunnell said that while the 350-foot zone has been cited in several research studies, it is by no means completely protective. “It’s just sort of a minimum,” he said, noting that ester formulations of 2,4-D can drift for dozens of miles under the proper circumstances.

Meyers said the signs may help in as many as half of the cases of 2,4-D drift in Oregon. “I think they will have a big effect,” he said. “One of the situations this year if we had had the signs up, I think it wouldn’t have happened.”

That still leaves the other half of the cases, and both Tunnell and Meyers hope the ODA will put regulations in place to restrict the use of 2,4-D during the winegrowing season. Discussions are ongoing.

“Both Washington and California have very, very strict control on the use of phenoxy herbicides,” Tunnell noted. “As the industry here in Oregon grows, we say, ‘Why don’t we have the same protections as our colleagues?’ ”

“It’s not only a grape issue,” Meyers noted. “We’ve had almost a tripling of blueberries and organics in Oregon. All of these crops are very sensitive to phenoxy drift. We have to eliminate the cause during the growing season.”

CDFA Secretary Addresses California Drought Issue

Karen Ross calls for increased conservation, groundwater management

By Rayne Wolfe

May 21, 2014

For California Department of Food and Agriculture Secretary Karen Ross, who spoke to 150 grapegrowers and wine professionals on May 14 at the Wine Industry Vineyard Economics Seminar in Napa, water “fuels the basics of life, provides drinking water and water for human sanitation and for firefighting.”

Ross, the former president of the California Association of Winegrape Growers, praised the region’s grapegrowers for being innovative in water conservation and for developing and sharing farming practices that save water. “But there is more to do,” she said.

Ross urged conference attendees to focus on water conservation to ensure that everyone has clean water and that communities thrive.

Not that it will be easy.

Three years into the current drought, on Jan. 17, Governor Brown declared a drought emergency and urged Californians to reduce water use by 20%. Currently rainfall is off by 50% with only 18.08 inches falling in the Santa Rosa basin, where 30 inches or more would be normal.

Grapegrowers who rely on water from Lake Sonoma, Lake Mendocino and the Russian River, are facing severely limited resources with Lake Sonoma at 75% capacity and Lake Mendocino at 45%. There are also pending water diversions along the Russian River Valley watershed above the city of Healdsburg. With many communities issuing or anticipating mandatory water restrictions, this summer, every drop will count.

Current conditions have growers and government focusing on groundwater use.

“Groundwater management needs to be done on a local and regional scale because we have too many variables out there for a one-size fits-all,” Ross said. Groundwater normally provides 30%-40% of total water for the state annually, she added, but this year, it will likely account for 60%. Managing groundwater, improving conservation and increasing aboveground storage capacity can mitigate drought losses, she said.

There is good news, however. North Coast wineries and growers have experienced a second consecutive year of record-setting yields, and consumer demand for wine is strong.

“We are past frost season and that required no water for protection so we are finding our ponds pretty full,” said winemaker,Gustavo Gonzalez of Mira Winery in St. Helena. “There is also still plenty of moisture in the ground, which means we won't be in a hurry to irrigate. Keep in mind, however, that hydric stress is directly correlated to wine quality and so we are always very careful with our water use, drought or no drought,” Gonzalez said.

When the well is dry, Ben Franklin said, we know the worth of water.

“There is proactive, progressive movement on water,” noted Brad Sherwood, community and governmental affairs manager for the Sonoma County Water Agency. “If we don’t implement some type of groundwater management plan, the state will come do it for us,” he said.

While some wells have failed most are still viable. Frost fears have passed and Northern California grapegrowers are participating in public forums on water. Ross encouraged landowners to get even more involved and to team up with tech experts and collaborate on best practices.

“A missing element is a commitment to protect water rights,” Ross said. “In the past some farmers and ranchers tended to delegate to water districts. They have tended to be disconnected.

“Water is what brings us all together,” she told conference attendees. “We have to feed 2 billion people. We need it for the $100 billion tourism industry… Having a beautiful state requires a responsibility to keep California beautiful.”

Wine Executives Told to Look to Other Industries for Innovation

UC Davis Wine Executive Program examines winery and vineyard of the future

By Ted Rieger

April 2, 2014

UC Davis faculty members suggest that the wine industry look to other industries as sources of ideas for innovation to improve practices and technologies in vineyard and winery operations. This was an underlying theme of two presentations at the 14th Annual UC Davis Wine Executive Program (WEP) held March 24-27 on the UC Davis campus presented by the Graduate School of Management and the Department of Viticulture & Enology (V&E).

In a presentation, “Winery of the Future,” V&E chair and professor Dr. David Block first asked attendees to make a list of technologies and functions they envisioned in a winery of the future. After the ideas were shared and written on a blackboard by Block, he said, “There’s probably nothing on this list that isn’t already being done in another industry, or is not already being worked on in a research lab somewhere.”

As Block noted, “There are a lot of industries with similar production needs to wine, but the wine industry tends not to look outside itself for ideas.” His list of industries as idea sources included: pharmaceutical, dairy, brewing, other food and beverages, and perfume. As a specific example, he said the UC Davis teaching winery recently installed a clean-in-place (CIP) system for fermentation/processing tanks, something used for years by the dairy and pharmaceutical industries, which provides better cleaning with less labor, reduces water and chemical use, and is safer and more sustainable.

Block also said data management systems are used in some industries to automate paperwork and record keeping functions. One is LIMS – Lab Information Management Systems – in which all analyses from lab equipment are automatically fed into one database for easy access and comparison. Another, MES-Manufacturing Execution Systems – covers supply chain and production management and could include information beginning with vineyard sources of grapes and go through winemaking, blending, bottling, packaging, distribution and retail sales. This enables better decision making on an enterprise-wide scale to handle product orders, order supplies, and manage production volumes and scheduling.

Block discussed the new world of wine packaging, showing examples of wine in alternative packages that he purchased off-the-shelf. These included wine in plastic and aluminum bottles, in Tetra Pak cartons, and in single-serving containers – all of which have been used by other beverage and food industries for years. He said packaging wine in kegs for restaurant use is a growing market, with advantages in material savings, transportation and reduced waste. “In the winery of the future, people will no longer be constrained by a glass bottle and cork as the only package option,” Block observed.

The potential for consumer personalized products also exists, not only in terms of packaging, but also to create wines with specific flavor profiles that could be consistently reproduced. At the same time, Block advised that implementing new technologies and introducing new products should be an informed decision, based on the need and ability to increase quality, reduce processing costs, increase sustainability and better manage resources, or to sell more wine.

Precision Viticulture Will Enhance Sustainability

In another presentation, “Vineyard Operations of the Future,” viticulture professor and geneticist Dr. Andy Walker noted that technology, data management and precision management of agronomic crops such as wheat, soybeans and corn is way ahead of grape production. “Remote sensing to detect nitrogen and water stress in wheat has been used for years, and in many agronomic crops, they are gathering and using data each season to make decisions about how to farm next year,” Walker said.

Technologies are available and being used more extensively in other crop production systems. Walker explained, “Sensors and Global Positioning Systems (GPS) tell us where problems are occurring, and Geographic Information Systems (GIS) can allow us to layer different views of vineyard and vine data to help us understand how it all fits together.” He acknowledged, “These systems are not cheap or perfect yet, but at the very least they can tell us where the variability, the strong and weak areas of the vineyard are, to help us manage that variability.”

Walker said the vineyard of the future will be highly monitored, use remote sensing at canopy and ground level, use technology to continuously monitor vine water status, and more fully utilize satellite and aerial imaging technologies.

This year’s WEP class of 63 students represented five countries and seven U.S. states. Participants included winery and vineyard owners and managers, marketing executives, and representatives of suppliers, retailers, and financial, media and hospitality companies. The four-day educational program covered vineyard and winery operations, and current marketing, financial, economic and legal issues facing the wine industry.

Growers and Vintners Gather for Oregon Wine Symposium

Hot topics include water management, capitalizing on Oregon Wine Month

By Susan G. Hauser

March 4, 2014

Everyone was talking about the rain. That was not unusual in Portland, where rain is a common topic of conversation, but it held a different meaning for attendees of the Oregon Wine Symposium, held Feb. 25-26 at the Oregon Convention Center.

According to Dr. Greg Jones, professor and research climatologist in Southern Oregon University’s environmental studies department, monsoon conditions stemming from a typhoon in the western Pacific Ocean hit the Northwest last September, making it the wettest September on record. Fortunately for winegrowers, October was one of the driest on record.

“September stunk; October saved the day,” was how one grower summed it up for Jones.

Jones started off the second day of the conference with a climatology report, followed later in the afternoon by a practical session on vineyard water management, with Luisa Ponzi, winemaker at Ponzi Vineyards in Sherwood, and winemaker John Quinones of RoxyAnn Winery in Medford. With added input from Steve Price of Price Research Services, the two winemakers discussed solutions for too much and too little rain.

Improving Oregon Wine Month

In anticipation of another good year for Oregon wine, a panel comprised of Dewey Weddington of the Oregon Wine Board and wine sales managers from various aspects of the industry – including a distributor, a winery, a restaurant, a grocery store and a wine bar – discussed the upcoming Oregon Wine Month in May. Each offered tips on how wineries can piggyback on the state’s marketing campaign to best promote their wines.

Weddington admitted that last year’s Oregon Wine Month campaign fell flat. It focused on a three-hour public wine tasting in downtown Portland that drew little response and lost money. This year the emphasis is on marketing and on-air advertising. “Everything is geared toward pointing people to wineries or to the Oregon Wine Month page at Oregonwine.org,” he said.

Panelists advised vintners to zero in on the most interesting aspects of the winery, the place, the people or history, and convey that in a brief but engaging story that will compel shops and restaurants to carry their wine and will make consumers want to buy it.

“The wine tastes better if there’s a good story,” said Dan Mages, wine manager of the Urban Farmer restaurant at The Nines Hotel in Portland.

Water into Wine

At the session titled “Water into Wine,” Steve Price noted that until recently, winemakers and growers weren’t giving water enough attention. “Water got left out of the textbooks, although it’s a main component of wine.”

He added, “Water is one of the easiest compounds I work with, but it’s right up there with Brix in importance.”

Quinones worked in Napa Valley for more than 20 years before moving to Southern Oregon where, he said, the humidity is unusually low. He said he is careful to monitor the moisture in the soil of the Rogue Valley, noting, “Dehydration is the bane of quality winemaking.”

Ponzi had the opposite problem, particularly during last year’s soggy September. Still, she said, “I much prefer rain over heat because there’s more you can do.”

One solution she found to deal with too much surface water was to hire a helicopter to fly low over the vineyards and blow off the water. “It’s quick and not too expensive,” she said, quoting the cost at $500 for one hour, covering 20 acres.

However, an audience member said that when he tried that, the helicopter “blew down the whole damn trellis.”

Ponzi also said that in 2013, a high-dilution year, she did up to a 30% saignée. “If you have a rosé program, that’s great,” she said, in reference to the technique that involves removing a percentage of the juice from the must. She said she freezes the juice, concentrates it and adds it back to the fermenter, along with added sugar.

Making wine in a dry year is more difficult, she said. “You run the risk of making wines that are out of balance.” She said she believes in adding water, “the earlier the better. Deal with the chemistry later, if you need to make adjustments.”

But Jones, in his climatology report, predicted that Oregon winemakers will experience a slightly cooler spring with near-normal precipitation, and a dry summer that is warmer than average. “The Old Farmer’s Almanac” for 2014 is in agreement, he said, although it’s calling for another wet September.

“If it rains in September,” said Jones, “it’s their fault, not mine.”

Chardonnay in Focus at Washington Grape Grower conference

Changing perceptions of the state’s most-produced grape variety

by Sean P. Sullivan

February 7, 2014

“I see chardonnay at the crossroads,” said Seattle Times writer Andy Perdue at the 31st annual Washington Association of Wine Grape Growers conference. “Washington is becoming a red-dominated wine region.” The conference, which took place this week in Richland, Wash., had more than 2,200 attendees and 158 exhibitors.

Though it might come as a surprise to many, chardonnay is typically Washington State’s most-produced grape variety, occasionally giving up the top spot to riesling. However, cabernet sauvignon, which has more acreage in the state than either of those varieties, trailed chardonnay in production by a mere 1,000 tons in 2012. Some expect cabernet to take the top spot when 2013 production numbers are released later this month.

“I think there’s a perception question about where chardonnay sits (in Washington),” said Glenn Proctor, a global wine and grape broker at Ciatti Company in San Rafael, Calif. He noted that many already think of Washington as a cabernet sauvignon state despite chardonnay’s prominence.

Proctor said that having perceived quality and a well-defined style for chardonnay were critical to Washington’s long-term success, saying of California’s top regions, “All have an identity with consumers and recognized styles.”

As Washington seeks to establish an identity for its chardonnay, Kevin Mott of Woodward Canyon noted that style is not static. “Deciding which style as a winemaker is an evolution,” he said. “Our style has changed dramatically over time,” he said of Woodward Canyon, noting that the winery had moved toward using less new oak to make the wines more food friendly. “The market is ever changing. You have to make a style you’re happy with as a winery and go find people that like that style.”

In Washington, Ste. Michelle Wine Estates, the parent company of Chateau Ste. Michelle as well as a number of other wineries and brands, dominates chardonnay production. David Rosenthal, assistant winemaker at Chateau Ste. Michelle, said that stylistically the structure of Washington chardonnay tends to be lighter than its California counterparts and subsequently required a more judicious use of new oak. “Washington can’t handle the same amount of oak as some other areas of the world,” he said.

Co Dinn, formerly of Hogue Cellars and now of Co Dinn Consulting, said he believes it is critical for Washington to identify and play to its strengths. “To me the question is really not whether we can or cannot make a certain style,” he said. “We can make any style out there. The key question is identifying our natural advantages, where they lie, and what styles we can make consistently well year in and year out.”

Despite chardonnay’s 50-year history in Washington, Dinn said he believes the exploration is truly just getting started. “I think we’ve just begun to scratch the surface of the sites that are appropriate for chardonnay in the wider areas of the state,” he said.

David Ramey of Ramey Wine Cellars in Healdsburg, Calif., suggested that the emphasis in Washington should be on identifying cooler vineyard locations. “It seems to me that there isn’t so much discrimination in terms of where chardonnay is grown (in Washington),” Ramey said. “The history of chardonnay in the last 20 years in Napa and Sonoma is a march toward the ocean. That’s where our cooling influence comes from. Chardonnay does better, up to a limit, in a cooler site.”

Ste. Michelle’s Rosenthal agreed. “I think one of the keys is going to be finding cooler vineyard sites for chardonnay,” he said. Rosenthal also noted the need for improved farming practices.

Ramey, who produces 40,000 cases of wine annually at his winery, 60% of it chardonnay, rejected the trend in the United States toward stainless steel chardonnays. “Stainless steel chardonnay is the wrong answer to excessively oaked chardonnay,” he said. “The answer to excessively oaked wines is to use less new oak. And then the answer to excessively buttery chardonnays is battonage, is lees contact.”

Ramey provided advice to Washington wineries about how to grow their brands nationally. “I believe brands are built on-premise,” he said. “If you want respect, you have to be at the fine restaurants.” He also noted the importance of getting in front of buyers, saying, “Marketing is shoe leather.”

Ultimately, however, Ramey said there was only one path to success for Washington chardonnay if it is to ever emerge from cabernet sauvignon’s shadow. “The best way to grow your brand and brand Washington is quality, quality, quality, quality,” he said.

On Jan. 16, Silicon Valley Bank (SVB) released its annual “State of the Wine Industry” report for 2013-2014. Based on research, in-house expertise and a survey of nearly 650 West Coast wineries, the report addresses trends and critical issues facing the U.S. wine industry.

“Despite news to the contrary in recent months, wine supply is in balance heading into 2014 and we expect the highest rate of sales growth since the recession, despite a tough economy,” said Rob McMillan, founder of Silicon Valley Bank’s Wine Division and author of the report.

While he pointed out that ample supply and stable pricing will benefit consumers in the coming year, McMillan predicted that increased grape costs and flat consumer pricing will mean lower profitability for wineries.

The report’s key findings and predictions include:

In the short term, demand will continue to grow and producers will have limited pricing power.

Baby Boomers’ declining demand for wine will not be immediately replaced by Millennials’ demand, impacting the ability for wineries to sustain their current rate of growth.

Expect final numbers on the 2013 harvest to reach 3.94 million tons, the second-largest harvest on record in California after 4 million tons were harvested in 2012.

Sales growth in fine wine is predicted to increase 6%-10% in 2014 – the first increase in three years.

After short harvests in 2010 and 2011, the 2012 SVB report warned of a coming wine shortage. However, ideal weather in 2012 along the entire West Coast led to a vintage year characterized by very large yields and great quality – the largest crop on record for California. A similar situation appears to have arisen in 2013, with SVB predicting the second-largest crop in California’s history. “Based on conversations with AVA associations, wineries, growers and survey information, we believe 2013 will probably come in around 3.94 million tons,” the 2014 report states. “But even with a second near-record harvest, the industry appears balanced with current supply.

Financial Forecast

The report predicts that in 2014, the U.S. will see the slowing of corporate mergers and acquisitions, an increase in corporate investment, decline in government support, slowing of the gains in housing values, continuation of increased regulation, higher taxes and increasing GDP growth year-over-year.

SVB expects to see growth in consumer wealth and spending, a pick-up in job creation and hiring with more predictable monetary and fiscal policy, as well as stable interest rates through the entire year. More difficult to predict, however, are certain “wild cards,” including gas prices, the small possibility of a stock market bubble, and political unrest stemming from the divergence between the wealthy and middle class. Unforeseen political events could also result in a decrease in market stability.

Factors Affecting Planting Decisions

According to SVB, a number of factors will affect vineyard planting decisions in the coming year. An increase in bulk wine imports, for example, could mean that less domestic supply will be needed. Meanwhile, land values are increasing in the San Joaquin Valley and crops such as nuts and citrus fruits are proving to be attractive economic options when compared to wine grapes.

Access to water will also be a major factor, particularly in California’s North Coast region. River flows, ground water, and water storage are each reaching historic lows, and storage is currently at about 35% of normal. Snowpack is the real concern as current estimates place water content for the end of the season at the lowest point since the drought of the mid-1970s. “The situation does not look good for our farmers in the Central Valley in particular, but everyone will be hurt if the snowpack doesn’t get some above-average dumps in the next several months,” the report warns.

Even so, SVB reports that overplanting could become a problem, as North Coast growers replant vineyards and increase the supply of fine wine production by planting more grapes in Sonoma, Mendocino and Lake counties. “Recent additional plantings can probably be accommodated, but an increase in the pace of planting could tip the scale to overplanting,” the company states.

Wineries’ Financial Performance

There was growth in the fine wine business in 2013, with revenue growth through the nine months ending September 30 of 6%. Symphony IRI data for 12 months in off-premise accounts for the period ending November, shows revenue growth of 7% with 8% of growth in direct-to-consumer sales after a 1% growth rate in November compared to the same period one year earlier.

SVB predicts that the U.S. wine industry will see consistently increasing direct sales cresting $1.5 billion for the first time in history. According to the report, “This is a trend that should continue for the foreseeable future as larger wine companies start to jump on the band wagon and increase their efforts in direct sales.”

Overall, in 2013 there was positive sales growth, but the growth rate was lower and there was no improvement in profitability, the SVB report concludes. However, it ends on a positive note: “We are forecasting the first increase in sales growth in the past four years and expect 2014 fine wine sales to fall in a range of 6%-10% growth.”

A panel of ag professionals and grapegrowers discussed the benefits of sustainable practices and certification programs – environmental, economic, human, operational and regulatory – at the Vineyard Team’s 2013 Sustainable Ag Expo, held Nov. 18 in San Luis Obispo, Calif. According to Vineyard Team Executive Director Kris Beal, this year’s event had a record attendance of nearly 500 grapegrowers and agricultural managers, and a sold-out trade show with 60 exhibitors.

Rich Smith, owner and manager of Paraiso Vineyards in Monterey County and a founding member of the Vineyard Team in 1994, cited decision-making and operational benefits of sustainable farming programs. Smith began planting a 400-acre vineyard estate in the Santa Lucia Highlands in 1973, that now produces Paraiso Vineyard wines labeled as SIP Certified (Sustainable in Practice), the certification program managed by the Vineyard Team. Paraiso has been SIP Certified since 2008, which requires achieving and documenting 40 sustainable requirements.

Smith said the Vineyard Team has spent more than 15 years putting together credible science-based training programs, management protocols and a sustainable certification program with third-party verification. “Our goal with these programs and protocols is not to tell people what to do, but to give them tools to make better decisions and to make the right decisions for their particular farm operations,” Smith explained.

“The basic premise of the Vineyard Team’s programs has been so we can do a better job for ourselves, and SIP helps us verify we’re doing a better job than last year,” Smith observed. Based on science and best management practices, SIP offers growers options, and requires regular annual evaluation with third-party verification. As an example, Smith said using beneficial insects is an option for pest control, and it is regularly looked at with updated information. “You can consider and ask yourself every year if that is something that will fit into (your) program,” Smith said. “Being knowledgeable is part of what makes you a sustainable farmer,” he noted.

Alluding to the issue of “greenwashing,” Smith said, “Using sustainability as a buzzword for marketing purposes can come back to bite you if you’re not practicing it properly.” He stressed the importance of third-party verification for sustainable certification when dealing with the larger community. “People may believe you the first time, but the second time, you better have some proof,” Smith said.

Sustainability and the Regulatory Environment

Since the Vineyard Team established its first, self-assessment Positive Points System in 1996, it has been recognized favorably in the larger community and by regulatory agencies, receiving grants and awards from the U.S. Environmental Protection Agency, the California Department of Food and Agriculture, and the California Department of Pesticide Regulation. One early benefit of Positive Points for Vineyard Team members was the ability to be included in an Ag Waiver for certain requirements of the Central Coast Regional Water Quality Control Board.

Smith acknowledged current groundwater decline and supply issues facing growers and residents in the Paso Robles Groundwater Basin (the subject of another Expo conference session). He believes it will take long-term water engineering and management solutions to solve the problem. Vineyard Team members’ history of cooperation, and their sustainable practices and knowledge can help them address issues and adapt to challenges.

“The better the job we do in our day-to-day operations, the more it reduces the chance of having regulations imposed upon us, and it puts us in a better position to negotiate on the regulations that may be proposed,” Smith noted. “There are good reasons to be proactive in sustainability, and it’s up to us to tell our story.”

Voicing a frustration, Smith observed, “Everybody wants us to be sustainable, but nobody wants to pay for it.” Even so, he added, there are other benefits. “I’m a sustainable farmer because it enables our vineyards to be managed better, and it provides us better profitability, and that’s without anyone paying a premium for our products based on SIP certification.”

Economic Benefits

Another panelist, Kirk Story of Stockman’s Energy and Water, discussed the economic benefits of sustainable initiatives to improve farm energy efficiency, such as more efficient irrigation pump systems, and utilizing renewable energy sources. “Excess equals waste,” Story said. “Our premise is that waste has dollar value, and if we target waste, we turn that liability into an asset,” he said. Another speaker, John Petroff of Taylor Farms in Salinas, which packages and distributes fresh lettuce products, discussed how retailers, including the company’s largest customer Walmart, now demand supply chain sustainable practices in the production, packaging and transport of farm products to market.

Based in Atascadero, the Vineyard Team serves primarily Central Coast vineyards and wineries in Monterey, San Luis Obispo and Santa Barbara counties, but also has SIP Certified operations in Sonoma and Napa counties. More than 500,000 cases of wine bear the SIP Certification seal, produced from 30,000 acres of California vineyards.

Wine Tourism Conference Focuses on Wine and Food Travel

Third annual conference aims to help wineries attract and engage visitors

By Susan G. Hauser

November 19, 2013

The third annual Wine Tourism Conference, held Nov. 13-15 in Portland, Ore., featured a surprise speaker as the conference got underway: Oregon Governor John Kitzhaber. As Kitzhaber put it, wine tourism offers “a sense of place in bottles” that inspires visitors to use their travel dollars to invest in local economies.

Subsequent speakers referred to the governor’s appearance as proof of the fact that wine tourism is a big deal. “Wine tourism is growing in importance,” said speaker Laura Mandala of Mandala Research. “That’s why we had the governor here.”

The conference speakers addressed a number of topics designed to help participants take advantage of the growing numbers of tourists whose motivation to travel is a love of food and wine. Expert advice was offered in topics ranging from mastering social media in order to attract visitors, to forming strategic partnerships with other businesses and associations to create events and attractions that can turn visitors into enthusiastic brand ambassadors.

Keynote speaker Linda Murphy, columns editor for Vineyard & Winery Management magazine, shared some findings from her book, “American Wine: The Ultimate Companion to the Wines and Wineries of the United States.” Work on the next edition of the 2012 book, co-authored with Jancis Robinson, has already begun.

State by state, Murphy talked about the growing numbers of wineries and their appeal to tourists. Visitors, she said, are looking for that “sense of place in bottles,” mentioned by Gov. Kitzhaber, and because of that it’s important to be authentic and not try to be something you’re not. To illustrate that, she spoke of Maui’s Winery, in Hawaii, which first tried making wine from grapes but succeeded only after using what was already growing there – pineapples – and now is a huge tourist draw for its sparkling and semi-dry pineapple wines. Visitors tend to buy a lot of the distinctive wine to take home as gifts and souvenirs.

Similarly, some successful South Dakota wineries not only focused on the local agricultural product – berries – but were astute enough to choose locations near the state’s biggest tourist attractions, Mount Rushmore and the Black Hills. What those Maui and South Dakota wineries are doing is sharing their pride of place, said Murphy, and that involves so much more than just what they pour.

“I think how tourists are treated is more important that what’s in a glass,” Murphy said. She encouraged wineries to extend sincere and authentic hospitality. “Tell your story, be warm, and educate in a comfortable way, not a preachy way.”

The final day of the conference got off to a rousing start as Lisa Mattson, communications director for Jordan Vineyard & Winery in Healdsburg, Calif., played the parody music video she created for Jordan, “Blurred Vines,” based on the hit song, “Blurred Lines.” It was just one example of the fun and innovative approaches Mattson has developed for introducing more people to Jordan’s wines.

She and Camron King, the executive director of the Lodi Winegrape Commission, offered a presentation on Virtual Tourism: Promoting Outside Your Region. Their advice can be distilled into two words: authenticity and consistency. Authenticity comes from the winery culture that is demonstrated in the brand and every communication that goes out under that brand. Consistency comes from making sure that every representation of the company puts forth the same image and message.

Consistency also means making sure i’s are dotted and t’s are crossed. In digital parlance, that means making sure your URLs are correct, your links work and your tags are informative and optimized. Mattson said she keeps a spreadsheet of Jordan’s web presence, noting tweets, Yelp reviews, Facebook and blog posts and making sure that correct information about the winery is accessible in all those places.

Some of King and Mattson’s specific suggestions included:

Create a personality for your brand with an appealing spokesperson, who appears in entertaining and informative videos about the wine, food, region, history, etc.

Hold blogger tastings by sending samples to particular wine bloggers and getting online with them at a specific time so they can tweet and blog about the wines.

Identify photo opportunities for winery visitors with signage, so they’ll know the best places to point their cameras and you know they’ll be sharing great shots.

Invest in a good camera and make sure the photos on your website make people want to be there. Include some “behind the scenes” photos to make website visitors feel like insiders.

Be sure your info is accessible on mobile phones.

For the presentation on Strategic Partnerships and Why They Are Important, John Cooper and Michele Boyer offered specific examples of how they’ve made partnerships work. Cooper, president and CEO of the Yakima Valley Convention and Visitors Bureau, told how the visitor center partnered with the local humane society to create a popular “wine doggies” event.

Boyer, owner of M&B Concepts, told of partnerships she forged on behalf of wineries with Kimpton Hotels and Nordstrom. Both the hotel company and the nationwide department store were happy to include wine in their customer loyalty programs. In addition to increased sales for the winery, the partnerships led to an increase in wine club memberships.

“Look for nontraditional partners,” Boyer advised. For example, she suggested partnering with local sports arenas, where fine wines are a perk for suite owners.

In 2014 the Wine Tourism Conference returns to California, where it will be held Nov. 12-14 in Paso Robles, San Luis Obispo County.

Taste of Sonoma

Sonoma Harvest Wine Auction Shatters Record

2013 auction brings in $1.4 million for local charities

September 3, 2013

Sonoma County, Calif. – More than $1.4 million was raised at the Sonoma Harvest Wine Auction at Chateau St. Jean on Sunday, Sept. 1, more than doubling the auction’s income from 2012 and setting a new record. The auction is part of Sonoma Wine Country Weekend, Sonoma County’s top charitable fundraising event, held annually over Labor Day Weekend.

With a Brazilian theme of “Sonoma Samba,” the auction drew 600 attendees. Auctioneer David Reynolds urged the crowd to bid high while competing for 35 lots, ranging from sought-after wines to international travel.

The day’s largest-grossing lot was the first annual “Fund the Future,” which raised $691,250 for childhood literacy and reading programs. This was the highest-grossing lot in the auction’s 21-year history. Funds will be divided evenly between the Sonoma Valley Education Foundation’s Summer Reading Academy, Schools of Hope (United Way of the Wine Country) and Pasitos Playgroups (Community Action Partnership).

Joe Anderson of Benovia Winery; the Gallo Family; and Katie Jackson of Jackson Family Wines each donated $75,000 to Fund the Future, and Tom Klein, owner of Rodney Strong Wine Estates, made a $150,000 commitment with a $50,000 bid toward the initiative each year for this and the next two years.

Other top lots included the Gallo Family and MacMurray Ranch Barn Dance BBQ lot that sold for $125,000; the Buena Vista/DeLoach and Boisset Family Wines Thermador Kitchen and Dinner Party with Jean-Charles Boisset lot that sold for $55,000; and the Kosta Brown World Cup Soccer Trip to Brazil lot that sold for $44,000.

In addition to more than doubling the results of last year’s auction, gross proceeds are expected to exceed $2.5 million for the entire Sonoma Wine Country Weekend once final tallies are calculated. This is an increase of more than $1 million over last year.

“Today was a celebration for the entire county. It was an inspiration to all of our vintners and growers in the wine industry, and a step in the right direction for the future of our children in Sonoma County,” said Honore Comfort of Sonoma County Vintners. “The success of this weekend was a result of the entire Sonoma County wine and grower community coming together with tremendous support. They made it happen.”

Produced by the Sonoma Valley Vintners & Growers Alliance and the Sonoma County Vintners, the 2013 Sonoma Wine Country Weekend also included Taste of Sonoma at MacMurray Ranch, which sold out at 2,500 attendees this year, and Sonoma Starlight at Francis Ford Coppola Winery. Winery lunch and dinner events were also held at various Sonoma County locations throughout the weekend.

Jim Wolpert Receives ASEV Merit Award

UC Davis viticulturist voices concern about the future of extension
By Ted Rieger

June 27, 2013

Dr. Jim Wolpert, extension viticulture specialist emeritus from UC Davis, received the American Society for Enology and Viticulture (ASEV) Merit Award at the society’s 64th annual national conference in Monterey June 27. The Merit Award is ASEV’s highest honor, presented annually to an individual who has contributed significantly to the advancement of enology and viticulture, or to ASEV.

While the award presentation celebrated Wolpert’s career accomplishments and contributions to the industry, it was tempered by his comments regarding the uncertain future for the UC Cooperative Extension (UCCE) system.

In his speech, Wolpert noted that in 1986, the number of UCCE farm advisors statewide totaled 425. Today they number only about 220. He cited competition in the state budget with other critical programs as one reason for the decline in extension program funding. Funding cuts have significantly hit county viticulture farm advisors, who are now fewer and farther between. Today, one advisor commonly covers multiple counties. When a neighboring county advisor quits or retires, the next closest advisor is asked to take on more territory, and sometimes advise on other crops in addition to grapes.

“The classic line is, ‘Do the best you can,’” Wolpert said.

Possible future responses, he added, include: industry funding for extension positions (something the table grape industry did recently in the San Joaquin Valley), the use of more consultants by growers, and wine companies utilizing more grower-relations representatives.

He cited electronic media, e-mail and social media as methods some advisors use to communicate more often to more people today, but said, “You’ve got to be face-to-face with the growers at some point, it’s a two-way information flow. So consider what will happen if you lose those farm advisors.” Wolpert admitted, “I know this is a downer for a talk, but you need to know about this. You can see the future coming. As long as you are forewarned, hopefully you are also forearmed.”

A native of Indiana, Wolpert received his bachelor of science degree in horticulture from Purdue University, and received his master’s degree and Ph.D from Michigan State University. He began at UC Davis in the Pomology Department in 1983, then joined the Department of Viticulture and Enology in 1985. He was soon involved in a major industry issue, the emergence of phylloxera on AxR 1 rootstock. He worked on evaluating alternative rootstocks and advising growers on choices, leading to a major vineyard replanting period in California.

Wolpert served as V& E Department chair for 10 years during a critical time in the department’s history, as it planned new facilities for the Robert Mondavi Institute that now includes modern research labs, new classrooms and a state-of-the art teaching and research winery. Wolpert is credited by colleagues for his fundraising skills and his leadership in the development of the new facilities.

He downplayed his part, citing other department faculty for their contributions. “We had to come together as a team to get the job done,” Wolpert said, “which meant putting personal agendas aside, and it was a wonderful time.”

Wolpert cited several colleagues and mentors during his career, specifically his graduate advisor at Michigan State University, Dr. Stan Howell, who he described as, “my mentor and tormentor.” Howell inspired and encouraged Wolpert at a time of personal doubt about whether or not to stay in graduate school. Howell also introduced him to viticulture research.

Much of Wolpert’s career research focused on the evaluation of rootstocks, clones and alternative wine grape varieties for California vineyards. He led vineyard trials at the UC Oakville Experimental Station for the Heritage Zinfandel Project after traveling throughout California collecting plant material from historic old vine zinfandel vineyards. He started the Petite Sirah Heritage Block at UC Davis, and one of his last major projects was starting trials at the UC Kearney Agricultural Center in Fresno County to evaluate alternative wine grape varieties for the San Joaquin Valley.

He served as ASEV president in 1996-97 and was a co-organizer of numerous symposia. In July 2012, he received the ASEV Eastern Section Outstanding Achievement Award.

Wolpert officially retired from UC Davis in January 2013 and recently moved to Hermann, Missouri.

A fan of using famous quotations in his talks, Wolpert ended with one from Robert Mondavi, applicable to his own career: “If you find a job you love, you’ll never work a day in your life.”

Response to the issue of UC Cooperative Extension cuts by Barbara Allen-Diaz, vice president of UC Agriculture & Natural Resources:

“…The UC Division of Agriculture and Natural Resources remains committed to addressing issues critical to the industry. We are currently interviewing candidates for two UC Cooperative Extension viticulture advisor positions. One is a permanent UC-funded career position and the other is a six-year position funded by the California Table Grape Commission. In the near future, the recruitment for a Cooperative Extension specialist in wine grape viticulture will commence. In addition to these crop-specific advisors, UC Agriculture and Natural Resources has invested in a strong complement of Cooperative Extension advisors and specialists with diverse expertise in fields such as pest management, plant disease, water management, and other disciplines statewide that support this important industry.

Budget cuts and retirements over the past decade have significantly reduced the numbers of UC Cooperative Extension advisors and specialists, but we have maintained our core by identifying priority positions, strategically using state funds and seeking industry support.

We are committed to rebuilding UC Cooperative Extension’s research and extension strength. Between the positions recently filled and those under recruitment, we are on track to hire more than 70 Cooperative Extension advisors and specialists between 2012 and the fall of 2014 statewide. Since the beginning of 2012, we have successfully recruited for and hired almost 30 Cooperative Extension advisors and specialists across the state.

As the state’s economy recovers, our budget has stabilized and UC Cooperative Extension is on the rise. With our futures intertwined, we rely on our industry partners for their continued advocacy and support to ensure that Cooperative Extension funding grows to help meet the needs of Californians.”

Vineyard & Winery Management (V&WM) and The Press Democrat have concluded the first Press Democrat North Coast Wine Challenge, held May 29 and 30 at the Sonoma Wine Country Hilton in Santa Rosa, Calif. The new wine competition focused exclusively on wines produced in North Coast AVAs, including those in Napa, Sonoma, Mendocino, Lake, Marin and Solano counties.

The wine named as “Best of the Best” from a field of nearly 1,000 entries was the Beaulieu Vineyard Napa Valley Tapestry Reserve 2009, a red Bordeaux blend.

In keeping with the competition theme, judges represented the best of the North Coast’s wine professionals, including sommeliers, winemakers, retailers and media. To bring a variety of perspectives to the judging, each three-person panel included a winemaker, a sommelier or retailer and a member of the media.

The North Coast Wine Challenge introduced a new approach to award designations, according to Debra Del Fiorentino, V&WM’s director of wine competitions. “Wines were designated the ranking of Best of Class by Category, Best of County, and ultimately, the Best of the Best as the top award.”

In addition to awarding medals, panels submitted point scores for gold medal wines, based on the 100-point scale. A total of 132 wines received gold medals.

Chief Judge Daryl Groom, owner/winemaker for Groom Wines in Healdsburg, Calif., led the event in its inaugural year. “We had a fantastic first event and I could not be happier with the judging and the results,” he said. “Where else in the world do you get to taste that many absolutely top notch wines of such diversity, except on the North Coast of California? Picking the ultimate winners was tough, but some really stunning wines shone through.”

“We live and work in the heart of the leading quality wine region in the country and The Press Democrat is committed to bringing new focus and attention to our great wines,” said Steve Falk, CEO of Sonoma Media Investments, parent company of The Press Democrat.

The Press Democrat will host a public tasting July 14 featuring a selection of medal-winning wines from the competition. For details about the public tasting, a list of competition judges and complete results visit www.northcoastwinechallenge.com.

Scenes from Wineries Unlimited 2013

From barrels to bottles to lip balm, anything – everything – a person might desire for a winery, vineyard or tasting room was on display at the 37th Wineries Unlimited Trade Show & Conference, held in Richmond, Va., March 12-15.

I tried to see it all, from the Aaqua Tools barrel and tank washers to the Zemplén Hungarian oak barrels. There was so much to take in, so many new as well as familiar objects to scrutinize that I may have missed a few exhibits. Did I somehow drift by the Tenax display of deer fencing and bird netting? Did I miss Picnic Plus’ wine bags, cheese boards and totes? Well, there was no time for additional perusing now: Gary Finnan’s “10 for 1” session on Tasting Room Design was about to begin.

Short of cloning oneself there’s no way to see, listen to and participate in every one of the overlapping conference sessions. Most attendees approach the conference with focused interests and needs, but from a writer’s, rather than a vintner’s, point of view many topics were tempting. For me, it was like sampling a smorgasbord of educational, informative and thought-provoking issues relating to enology, viticulture and marketing.

At the “10 Steps to Better PR” session Paul Wagner provided an abundance of practical advice which ranged from relatively simple suggestions – put your winery phone number on your label – to more subtle recommendations such as: Know where the market is going and aim your programs at the future, not the past.

In another session, PR yielded to, well, yields as Dr. Sara Spayd addressed the provocative question of whether the popular belief that lower yields make for better wine is always true. Acknowledging that growers and winemakers have traditionally held differing views on the matter, Spayd tackled the debate by sharing research results from a project that examined (among many other things) the effect of row spacing on cabernet sauvignon yield by comparing 6-, 8-, 10- and 12-foot row spacing; yield and fruit consequences of very high shoot density; and undesirable effects of deep shade. “Next time you enjoy a truly superb wine,” she concluded, “you know you are drinking wine made from well-cared-for grapes of very low yield (1.5 - 2.5 tons/acre).”

Elizabeth Slater’s discussion on social media was a wakeup call to those of us who haven’t been as diligent as we should about keeping up with the multitude of online professional opportunities available to us. But instead of making us feel guiltier than we already do about our neglectful relationship with the time-devouring demands of Facebook, Twitter and their kin, this session was encouraging rather than dispiriting. Slater clarified some of the differences between the various options, among them the fact that Twitter is mainly used by older adults (more male than female) and is widely used in the wine industry; that the most popular pins in Pinterest (where female users dominate) are about food and drink; that Skype can be used very effectively by wineries to conduct wine tastings. While she acknowledged that social media is constantly changing, and that keeping up with it demands endless amounts of time, Slater laid out various strategies for capitalizing on its potential. She stressed that “savvy use of social media can help you sell more wine and bring people to your winery. Social media is a big deal!”

In Gary Finnan’s informal round-table session on tasting room design, a Virginia vintner sought advice about the best way to refurbish the space his winery had outgrown over the past decade. The owners of a relatively new winery in Florida were looking for design suggestions, while a family from Georgia needed advice on expanding their tasting room to better accommodate the growing number of people visiting the winery. Along with much helpful input from some of the attendees, Finnan’s advice was generally creative and practical. His list of 20 specific recommendations covered everything from “Hide the dishwasher/sink/storage” to “Review your message, product, people and place annually.”

The keynote speaker at the Wine & Dine Gala was Eric Trump, executive vice president of development acquisitions for Trump Winery in Charlottesville, Virginia. In his upbeat address, Trump emphasized that Virginia wine country is blessed in a number of ways. “We have the best location in the world,” he said. “We have the quality and the incredible history. We have diversity, and we have consumers who are smarter than they’ve ever been in history.” It was a confident and optimistic message – a fitting finale, perhaps, to Wineries Unlimited 2013.

Sonoma Vintners Present $453,500 to Local Charities

A total of $483,500 in proceeds from Sonoma Wine Country Weekend, the annual Labor Day Weekend collection of wine and food events jointly produced by the Sonoma County Vintners and the Sonoma Valley Vintners and Growers Alliance, was distributed to 32 Sonoma County beneficiaries on March 1st at St. Francis Winery and Vineyards in Sonoma Valley.

Two of the primary beneficiaries, the Boys & Girls Clubs of Sonoma Valley and Boys & Girls Clubs of Central Sonoma County, received grants that totaled $264,000 raised from the “Fund-A-Need” lot at the 2012 Sonoma Harvest Wine Auction, one of Sonoma Wine Country Weekend’s flagship events. The balance of funds was disbursed through the Sonoma Valley Vintners and Growers Foundation and the Sonoma County Vintners Foundation in small grants to local organizations across Sonoma County, from Petaluma to Geyserville, from Guerneville to Sonoma.

“Our goal is to support local groups that reflect our little towns, and multiply their efforts by supporting those in need while at the same time enriching the lives and neighborhoods of those engaged in helping,” said Sonoma County Vintners Foundation President Dan Goldfield. “The Wine Country Weekend grants don’t reflect the wine community giving anything away, but only doing our best to be involved in the culture that nurtures us, and of which we are a part.”

Including the charitable grants, the event generates more than $830,000 that supports the community through local non-profit organizations. Of the event’s $1.7 million gross revenue, organizers noted that with the Sonoma County organizations and businesses used to produce Sonoma Wine Country Weekend, approximately 90% of the total event revenue is returned to the Sonoma County economy. As the tourism dollars generated by the event are added to the equation, Sonoma Wine Country Weekend creates exponentially more impact.

Over the years, the Sonoma Valley Vintners and Growers Foundation and Sonoma County Vintners Foundation have raised a cumulative total of more than $11 million for Sonoma County’s non-profit organizations. The 2013 Sonoma Wine Country Weekend is set for Labor Day Weekend, Aug. 30-Sept. 1, 2013. For more information visit www.sonomawinecountryweekend.com.